Interview with Graeme Peters, Chief Executive, Electricity Networks Association (ENA)
30 August, 2017
Electricity lines businesses have been dominated by an engineering mindset. But they are changing to
become more customer-centric.
There are many examples of this new customer-facing approach which is driving change. One, we will
see new methods of distribution pricing that are more reflective of customer needs and new
technologies in the home. Two, higher standards of worker and public safety are impacting the number
of outages. Three, ENA is working with the government to reduce the disruptive impact on consumers of
trees bringing down power lines.
In August, ENA published a final guidance paper on pricing options. We encourage people in the sector to read it. The paper discusses how electricity lines companies are changing the way they price for their services. The old method of pricing has been around for decades and served us well, but it’s run its course. If we were to stick with the current model, the price of a connection to the network will have to rise more than it needs to.
Network companies are exploring moving away from flat-rate volumetric pricing – based on how much power consumers use – to the actual cost of providing a safe and reliable connection. Actual cost will likely be based on one of three things: peak demand, capacity and time of use. Of the options, time of use, is the possible the simplest for consumers to understand. If consumers are using the network at off peak times, they can save money, as opposed to using the network at peak times (typically at dinnertime).
Time of use pricing is a two or three tier price plan that could be peak and off peak, or with a shoulder period. This is all designed to make people aware of their peak loads and when they are using the network – and particularly with the expected adoption of electric vehicles in coming years. Being aware of times of heavy demand on the network will be an important consideration when recharging your car.
Electricity distributors want to avoid increases in those peak loads that are costly for a network to provide for. From our point of view, that means my members don’t have to spend so much of their customers’ money upgrading networks for higher peak loads. We’ll also have a more modern network that takes advantage of technology such as smart meters and energy management software. All exciting stuff.
There are no immediate price changes planned, but they are likely to be coming, possibly in 2020. Although, ultimately, it is mostly the retailers who will decide exactly what lines charges will be passed to the consumer, as they include our charges in the consumer’s end bill. It’s important to keep in mind that the lines component is only around 26% of the total average electricity bill, which also includes generation, transmission, and other charges.
Many networks are experiencing more outages due to bad weather. In the past two years, there’s been a move away from working on lines when they’re live. The Health and Safety at Work Act of 2016 led to a rethink on how much work should be done live. We’ve seen among many networks that a default approach of hands-on work on energised lines is no longer supported.
De-energising is good for safety but it can mean more power outages for consumers. While we realise this increase is not welcome, lines companies take the view that customers will support what we are trying to do as it further enhances worker and public safety.
Most power outages during bad weather are caused by trees. When it is windy and trees blow over or branches fall off, they damage power lines. We can’t eliminate that but we can reduce it by getting rid of old or risky trees that are close to lines. We don’t currently have the ability to do this as effectively as we could. So we’re looking forward to a government review of the tree regulations, which are currently not up to the job.
MBIE is reviewing the tree regulations in this financial year. We’ve done a lot of work to show that current tree rules are not effective and are causing extra costs and outages for consumers. We’d like to have more ability to ask people to set trees back from lines at a greater distance. This will ultimately reduce outages and lines charges, and result in safer outcomes for our workers and the public, in addition to reducing disruption to consumers.