Strata Energy
Consulting

Electricity full retail competition (FRC) in Australia

During the implementation of FRC in the Australian National Electricity Market (NEM), one of our team members provided secretariat and advisory services to the State governments, State regulators and NEM energy businesses.
Specific tasks included project management of the NEM FRC decision-making processes, secretariat and FRC advisory services to the NEM Settlement and Transfer Committee (NEMSAT) – the industry FRC decision-making body, and secretariat and FRC advisory services to the Jurisdictional Panel – the government/regulatory FRC decision-making body.

Wind integration in New Zealand

Strata’s managing director chaired the Wind Integration Project for the New Zealand Electricity Commission.
This project successfully established the wholesale market arrangements that enabled large grid connected wind generation to operate in the New Zealand wholesale electricity market.

Electricity FRC in New Zealand

One of our team members led the design of the market rules enabling FRC for domestic electricity consumers in New Zealand.
His other key areas of involvement in the project to design, build and implement the structures to bring FRC were the design of the metering data administration function, the design of the profiling system, and the design of the central registry of metering installations.
Over the following year, he was responsible for managing the electricity industry arrangement that initially governed electricity FRC in New Zealand, overseeing the bedding in of the FRC arrangements.

Electricity retail sector regulatory arrangements in New Zealand

While with the former New Zealand electricity regulator, one of our team members had overall responsibility for electricity retail sector regulatory arrangements within the regulator. Consequently, he was responsible for, amongst other things, leading the development of:

• rule changes for enhancing the regulator’s customer switching and reconciliation systems as well as the associated service provider agreements
• model domestic consumer contracts
• model use of system agreements
• model arrangements for small scale distributed generation
• the early stages of the regulator’s global reconciliation system development.

Subsequently, Strata has continued to advise the regulator on various retail sector regulatory arrangements including:

• a customer compensation scheme that applies during periods of severe supply shortage, such as enduring low hydro inflow sequences
• the development of a regulated default distribution agreement
• design of regulated processes for connection of distributed generation to distribution networks.

Gas FRC in New South Wales and the Australian Capital Territory

One of Strata’s team members was responsible for leading the project that implemented the necessary market processes, IT systems, and business systems required to enable FRC in the supply of gas in New South Wales and the Australian Capital Territory.
Responsibilities that were managed included overall programme management, market rules design and advisory services, IT vendor monitoring/management, monitoring of industry participant readiness, market participant and stakeholder communications, managerial and secretariat services to Gas Market Company – the industry entity facilitating gas FRC – development of processes and documentation to ensure a smooth transition from implementation to ongoing operations.
The team member subsequently chaired Gas Market Company’s Business Rules Industry Committee in 2006 (the primary rule change committee in the former NSW and ACT Gas Retail Market).

Gas FRC in South Australia and Western Australia

One of Strata’s team members was responsible for managing the project that implemented the necessary market processes, IT systems, and business systems required to enable FRC in the supply of gas in South Australia and Western Australia.
Responsibilities that were managed included overall programme management, facilitating the finalisation of the Gas Retail Markets’ rulebook and industry B2B arrangements, IT vendor management, monitoring the readiness of the various industry participants, managing the testing of the Gas Retail Markets, and coordinating the cutover from the previous industry arrangements to the new market arrangements.

Gas retail competition in New Zealand

During the process to design and implement the arrangements for gas FRC in New Zealand, Strata worked with the New Zealand gas regulator, Gas Industry Company (GIC) on downstream gas arrangements.
Strata personnel chaired the Switching and Registry Working Group and the Model Contracts Working Group, and provided project management and advisory services to GIC in regard to the New Zealand gas industry’s customer switching registry and downstream allocation and reconciliation system (including fulfilling the role of GIC’s project manager for the implementation of the latter system).
Following the successful implementation of this system, Strata continued to advise GIC on gas retail market matters.

Concept plan and roadmap to enhance gas retail competition in Singapore

Strata, in association with EMCa, recently advised Singapore’s energy regulator on a concept plan to enhance competition in the Singapore retail gas market.
This work involved reviewing the current gas retail market arrangements in Singapore, recommending a suitable approach to enhancing competition in the gas retail market, and quantifying the costs and benefits of the recommended approach.

Electricity FRC in Singapore

Strata, in association with EMCa, has provided advice to Singapore Power Services on the reconciliation and settlement implications of FRC in Singapore, and providing recommendations on the identification and allocation of unaccounted for electricity.

Concept plan and roadmap for a secondary gas trading market for Singapore

Strata is advising Singapore’s energy regulator on a conceptual design for an efficient secondary gas trading market in Singapore.
This work includes recommending necessary changes to Singapore’s gas industry/market structure and regulatory framework to facilitate efficient secondary gas trading (including necessary changes to the Gas Network Code), and developing a roadmap for the secondary gas trading market and associated market development initiatives.
This project has given our team an excellent insight into the current state of the Singapore gas market, including wholesale gas importation and supply arrangements, access to the different gas networks, capacity issues, pipeline nominations and balancing arrangements.

New Zealand wholesale electricity market development

For many years, Strata has provided advice on the ongoing evolutionary design and development of the New Zealand wholesale electricity market.
Strata’s personnel have chaired market design advisory groups, advised the electricity regulator and advised New Zealand’s Major Electricity Users’ Group.
Issues that Strata has advised on include transmission pricing, security of supply, extreme market pricing arising from transmission constraints, access rules for intermittent generation, urgent and temporary reconfigurations of the national transmission grid, and the introduction of global reconciliation.
Representative projects relating to energy network design and operation are listed below.

New Zealand Commerce Commission review of Asset Management Plans

Strata has completed the assessment and rating for compliance of 29 electricity distribution business’s asset management plans for the New Zealand Commerce Commission.
The assignment included an assessment of the current condition of those assets, an indication of likely future investment requirements, the impacts that the threshold regime has had on historical investment and how required investment might be addressed by future regulatory arrangements.

Reviews of transmission upgrades

Strata has provided advice to electricity regulators and to major electricity users on several proposed upgrades to the New Zealand transmission system.

Review of Transpower New Zealand’s capital expenditure for the Commerce Commission

Strata recently undertook a major regulatory review of Transpower New Zealand’s revenue submission to the Commerce Commission for the period 2015–2020.
Previously, Strata has undertaken several reviews of Transpower’s replacement, refurbishment and enhancement of assets and its information systems technology.
Through these assignments, Strata assisted the Commerce Commission to develop its approach to determining an appropriate level of revenue for Transpower.

Distribution capex reviews for the New Zealand Commerce Commission

Strata advised the New Zealand Commerce Commission on its assessment of the Christchurch electricity distributor’s customised price-quality path application.
This work included assessing the reliability and security standards contained in the distributor’s plans for the post-earthquake rebuild of the Christchurch distribution network.

Reviews of gas network regulatory expenditure allowances for the Western Australian Economic Regulatory Authority (ERA)

Strata and EMCa advised the ERA on proposed expenditure requirements for two gas network businesses in Western Australia.
This work involved applying applying a mix of network business management, management engineering, asset management and regulatory economic disciplines to the reviews.

Reviews of network regulatory expenditure allowances for the Australian Energy Regulator (AER)

Strata and EMCa advised the AER on proposed expenditure requirements for electricity transmission and distribution businesses in Queensland, New South Wales, Victoria and South Australia, as part of the AER’s five-year revenue determination processes. Strata undertook this work in conjunction with our partner firm, EMCa, applying a mix of network business management, management engineering, asset management and regulatory economic disciplines to the reviews.

Review of electricity network regulatory expenditure allowance for the Singapore Energy Markets Authority (EMA)

Strata and EMCa advised the Singapore EMA (as regulator) on the 5-year capex budget that was proposed by SP Power Assets (SPPA).
SPPA is the transmission and distribution network provider for Singapore.
This work was undertaken through our Singaporean partner firm, Frost & Sullivan.

Post breach reviews of electricity lines businesses for the New Zealand Commerce Commission

Strata has advised the New Zealand Commerce Commission on the quality performance of several electricity lines businesses that have breached regulated price-quality thresholds.

Interconnection rules and benchmark agreements

Strata has advised on the development of rules for interconnection within New Zealand’s national transmission grid and on the benchmark transmission agreement.

Ministerial Inquiry into the Penrose substation fire

Strata assisted the New Zealand Electricity Authority in its in-depth investigation into the October 2014 major fire event at Transpower New Zealand’s Penrose substation.
Penrose substation is a major grid exit point in central Auckland, directly supplying some 75,000 consumers.
The Minister released the inquiry report in late October 2015, which included recommendations for improvements and an ongoing monitoring process.

Investigation of a major automatic under frequency load shedding event

Strata assisted the New Zealand Electricity Authority in its investigation into an automatic under frequency load shedding (AUFLS) event that led to a very significant power outage.
The cause of the event was due to a highly complex issue regarding protection logic in the HVDC inter-island electricity transmission link.
Strata’s role was to assess the performance of the system operator in meeting its performance obligations during the commissioning and testing of new HCDV assets.

Expert witness on wind farm transmission impact

Strata provided expert witness testimony on the impact of a proposed wind farm on transmission arrangements in the South Island of New Zealand, including transmission congestion and the need for new transmission investment to accommodate the wind generation.

Connection of a wind farm to the grid

Strata provided advice to the owners of a large wind farm on the required technical arrangements for connection to and operation on New Zealand’s national transmission network.
The project included the management of compliance with the electricity market rules as well as arrangements for the sale and purchase of the wind farm’s output via the wholesale electricity market.

Expert witness on hydro station transmission impact

Strata provided expert witness testimony on the impact of a proposed hydro power station on transmission arrangements in New Zealand, including transmission congestion and the potential for deferral of new transmission investment as a consequence of the hydro station being built.

Access to retail data

Strata is currently advising New Zealand’s electricity regulator on facilitating access to retail data.
This data comprises consumption data, tariff data and data about consumers’ connections to distribution networks.
The policy objective is to encourage greater consumer engagement in the retail electricity market, which will in turn promote retail competition.

Distribution pricing

Strata is currently providing advice to New Zealand’s electricity regulator on distribution pricing arrangements that are appropriate for New Zealand.
Previously, Strata advised the former electricity regulator on distribution pricing arrangements for New Zealand.
The services provided included a review of the New Zealand distribution pricing methodologies, and approaches used internationally.
The output of this work was a set of distribution pricing principles and interpretative guidelines.

Demand-side management

Strata personnel have provided advice on the use of demand response in New Zealand’s wholesale electricity market, the use of interruptible load in the ancillary services markets and the use of demand response for the deferral of capital investment for network expansion.
This work has been directed towards achieving recognition of the value that demand side management can add to the electricity system and towards removing institutional barriers that prevent the potential value being realised.

Default distributor agreement

Strata is advising New Zealand’s electricity regulator on a rule change proposal that would regulate distribution network access arrangements.
The proposal would amend the market rules to include a default distributor agreement template for electricity distributors and retailers to use in the event they cannot agree on distribution network access arrangements.
Strata has also updated associated guidelines relating to price change consultations and embedded networks.

Secondary networks

Strata is assisting New Zealand’s electricity regulator on a review of secondary networks (electricity networks that are not directly connected to the national transmission grid).
This review is looking at the competition and efficiency implications associated with secondary networks.
The competition implications include the fact that some consumers effectively cannot switch electricity retailer.

Applications and Queuing policy - Western Power

In response to significant concerns with delays and costs in connecting to the Western Power network (particularly for new entrant generator connection applications) EMCa and Strata developed a significantly revised process for managing connection applications.
This work involved significant stakeholder consultation, assistance with regulatory approval of the revised policy and then assistance with the Western Power change management project to implement the revised policy.

Review of network access arrangements in light of Climate Change Policy - Australian Energy Market Commission (AEMC)

EMCa and Strata reviewed network access, network augmentation and system operation issues affecting the connection and ongoing operation of renewable generators in Western Australia.

Global reconciliation

Strata assisted New Zealand’s former electricity regulator to develop and implement global reconciliation in the electricity market.
This was a large multi-year project that resulted in one of the most fundamental changes to the electricity market since its creation in the 1990s.
The move away from differencing reconciliation, which allocated all residual electricity to “incumbent” retailers, enabled the electricity regulator to better monitor unaccounted for energy and the accuracy of distribution loss factors.
It also improved the transparency of reconciliation and reduced the risk of incumbent retailers being overcharged or undercharged for electricity.

Security of supply review

Strata advised New Zealand’s former electricity regulator on options for security of supply arrangements.
This work canvassed a number of issues, including the offer and dispatch strategies for reserves, the recovery of reserves costs from market participants, ownership options for reserves providers, information disclosure requirements, the process for tendering for the provision of reserves and possible hedge arrangements to assist with security of supply.

Value of lost load

In a large multi-year project, Strata advised New Zealand’s electricity regulator on the appropriateness of the value of unserved energy specified in the electricity market rules.
This work included face-to-face, mail-out and internet-based surveys of New Zealand electricity consumers, to gain an understanding of the value they place on reliability of electricity supply.

Ancillary services arrangements

One of the members of our team was involved in the development of New Zealand’s ancillary service arrangements, and assisted ancillary service providers with operational compliance.
He has also provided independent reviews of rule breaches and end-to-end technical reviews of ancillary service systems.

Electricity system operation and security

While working in a former role at New Zealand’s electricity regulator, one of the members of Strata’s team developed a market scheduling, dispatch and pricing model and is considered to be a leading authority in these areas.
He has also developed a reserves modelling framework within the generation expansion model and customised this model to evaluate the benefits of various transmission upgrade options that take into account factors such as power flow and wind resource variability.

The implications of evolving technologies on distribution pricing

Strata is currently advising New Zealand’s electricity regulator on the implications of evolving technologies on distribution pricing.
This is part of the regulator’s review of distribution pricing arrangements in New Zealand.

New metering rules for New Zealand’s electricity market

Strata advised New Zealand’s electricity regulator on the development of a replacement metering section in the market rules.
The former section had become outdated and ambiguous, and was no longer fit-for-purpose in light of evolving technologies. This work entailed the preparation of consultation papers and Board papers, input into rule drafting, and preparing summaries of submissions and responses to submissions.
The work also included the development / updating of various metering-related guidelines used by industry participants.

Distributed generation

Strata has advised New Zealand’s electricity regulator on the connection of distributed generation to distribution networks.
Importantly, the rule amendments that Strata worked on include an efficient new process for streamlining the approval of new small-scale distributed generation installations, where these incorporate standards-compliant connection equipment.
Strata has also advised the AER on the impact of photovoltaic installations on distribution networks.

Australian smart metering rollout cost-benefit analysis

Working with EMCa, Strata has advised both the Ministerial Council on Energy and the Victorian Department of Primary Industries on the costs and benefits associated with the rollout of smart metering in Australia and Victoria, respectively.

Advice on advanced metering infrastructure (AMI)

Strata advised the former New Zealand electricity regulator on AMI, including in regard to the development of the regulator’s smart metering policy and associated guidelines, as well as advising the Minister of Energy whether the roll-out of smart metering should be regulated.

New Zealand Parliamentary Commissioner for the Environment smart metering report

Strata has provided advice on smart metering to the New Zealand Parliamentary Commissioner for the Environment.
Strata’s report covered smart meter functionality, benefits and costs, international experience with smart meters and issues for consideration in New Zealand with respect to a rollout of smart metering.
Representative projects dealing with issues that relate to consumers in energy markets are listed below.

Medically Dependent and Vulnerable Consumer Guidelines

Strata team members developed the original policy on the disconnection of medically dependent and vulnerable consumers, and then assisted the Electricity Commission to develop a separate policy for each of the consumer groups.

Retailer of last resort

Strata advised the former New Zealand electricity regulator on retailer of last resort arrangements for consumers.
This work drew on learnings from similar arrangements in Australia.

Dispute resolution scheme

Strata personnel developed the initial governance arrangements and protocols for the New Zealand Electricity and Gas Complaints Commission.
This is a free and independent dispute resolution service for residential consumers with complaints about electricity and gas retailers and lines companies.
A Strata team member then went on to develop extensions to the above scheme, to cover landowner complaints and gas-related complaints.

Customer compensation scheme

Strata advised New Zealand’s electricity regulator on the development of new regulations that require retailers to pay compensation to consumers if a situation develops in the electricity market (such as a long, very low hydro inflow sequence) that triggers a national electricity conservation campaign.
Strata’s team includes several members that have held executive responsibilities for major infrastructure investment projects.

Electricity generation construction and management

Bill Heaps has managed electricity generation development projects.
Bill as General Manager geothermal generation, for Contact Energy.
In this role Bill also had responsibility for leading the integration of asset management across the total Contact Energy generation portfolio.

Market systems investment

Two members of Strata’s team have been responsible for investment in system operations systems including generation scheduling and dispatch and market pricing IT infrastructure.
One team member was Director and Chair of d-Cyper Limited with governance oversight of investments in data management for metering reconciliation processes and for the IT infrastructure required for the Australian Electricity Futures processes.
Members of Strata’s team have worked for many years on the development of security constrained dispatch markets.
This experience includes zonal and nodal pricing and the impact of transmission network constraints on market prices.
Zonal and nodal price differences represent the underlying cost of constraints and therefore the potential market value that may be produced from infrastructure investments that relieve constraints.

Energy transmission investment

Strata undertook a review of the $1 billion North Island Grid Upgrade Project (NIGUP) for the New Zealand Commerce Commission.
This review included an assessment of the management of the alliance based Contracts under which the NIGUP had been constructed. David Swanson, who assisted in this project, was project manager for the UK National Grid’s major grid investment projects.
Two members of Strata’s team are past CEOs of major energy infrastructure businesses.
Dave has significant experience in infrastructure investment in electricity, gas and mining infrastructure.
During the time that he was CEO of ECNZ, one member had responsibility for the construction of the Clyde Dam and repowering of the Manapouri hydro project.
One of our team was responsible for the National Grid’s investments in Northern England and its commercial operations in the eastern seaboard of the USA.
He was also National Grids’ Manager for the Bass Link project in Australia.
Three of our people were members of the Strata/EMCa team who reviewed and advised the AER on Powerlink’s proposed 500Kv transmission upgrade.
The deferral of the investment based on the Strata/EMCa advice has avoided a significant and costly stranded infrastructure investment.

Distribution infrastructure investment

Strata advised the New Zealand Commerce Commission on its assessment of the Christchurch electricity distributor’s customised price-quality path application. This work included an assessment of a significant investment in the reconstruction of Christchurch’s 66kV subtransmission system.
As executives and directors of electricity distribution businesses, three members of our team have had responsibility for numerous distribution system investments.
One of Strata’s team members has experience in gas infrastructure investment and managing transmission business risk, development, compliance, including management of a $900 million dollar capital expenditure budget.