Tauranga is one of the major centres in our area of operations and since purchasing the electricity assets, in November 2002, we have invested approximately $10 million in the network and developed plans to improve the reliability and security of supply to consumers in the Tauranga region.

There are a large number of new projects either already underway or in the final planning stages. Powerco is well advanced in planning for Tauranga’s future needs by increasing levels of capital expenditure and hence our investment for growth and reliability related projects in the region.

This year, Powerco is spending almost $14 million in capital expenditure in the Tauranga region alone, and similar amounts are forecast for future years. To reinforce this point, Powerco’s capital expenditure per consumer in the Tauranga region is almost double that of other Powerco regions Powerco purchased the Tauranga network in November 2002 and this level of expenditure is significantly more than previous owners of the network spent in the region in recent years.

It should also be noted that expenditure on network maintenance in the region is at a level that compares appropriately with other lines companies in New Zealand.

Powerco’s planning team is working closely with the business community City and Regional Councils using the “Smart Growth” blueprint to ensure that the City’s future needs are well catered for. Reliability and security of electricity supply are key elements in this planning process.

Powerco is investing in many significant capital projects in the Tauranga urban area this year including:

• A complete upgrade of electrical protection and remote control systems using the most up to date electronic equipment. This will improve reliability and enhance restoration times should an outage occur (value $600,000)
  
• New underground distribution cables to support the central business district area. These will provide enhance security of supply by providing more alternative ways of supplying electricity to consumers in the event of damage to the network (value $500,000)
  
• New substation equipment to improve security of supply to Matua and Otumoetai are currently being installed (value $250,000)
  
• New distribution lines in the Bethlehem area to enhance reliability and security of supply (value $500,000) 
  
• The complete upgrade of the Waihi Road zone substation to increase capacity and security of supply to the hospital and central business district areas. The major items of equipment have been ordered from international manufacturers (value $1.9 million)
  
• A specifically targeted supply reliability programme, consisting of a number of smaller projects in the region (with a value over $1 million)

The remaining $9 million of capital expenditure is programmed for smaller distribution enhancement project, network replacement projects and the reticulation of subdivisions.

Powerco has released its latest asset management plan and this provides further information on projects on Powerco’s electricity network.

Background on Quality of supply

When consumers think about the quality of their electricity supply, and the price they are willing to pay for it, they will often be thinking of two characteristics – the interruptions to supply and the stability of the voltage.

The Electricity Regulations set out the variation in voltage that is acceptable and Powerco’s network is designed to comply with these. With the onset of the digital age, however, consumers are become increasingly interested in seeking higher standards and closer refinement of the voltage stability. Powerco can provide guidance to consumers on the installation of equipment that will bring this about.

The second aspect of electricity supply is its continuity. This is referred to as network reliability. It provides an important basis for monitoring the performance of the network - and is measured in terms of the number and duration of interruptions in the supply. (The two indices most commonly used to measure reliability are: SAIFI, for the frequency of interruptions, and SAIDI, for the duration. See the notes below for a full definition.)

Electricity supply consists of several components, generation, transmission via the national grid, distribution and retailing. The focus of Powerco’s operation is on distributing electricity from the high voltage national grid, through power lines and transformers to homes and businesses. Much of the distribution network consists of medium voltage lines, referred to as "feeders", forming a link between the national grid and low voltage equipment.

Powerco classifies these "feeders" into five different categories – largely defined by the type of activity undertaken by the majority of consumers connected to them. The categories are "large industrial", "commercial", "urban", "rural" and "remote rural". In practice, there is always more than one "type" of consumer connected to any given feeder.

Although individual consumers have their own particular needs, supply reliability tends to be of varying importance to different "types" of consumer. The cost of a disruption to the electricity supply can be of considerable economic significance to a large industrial user, which may have many employees. Powerco acknowledges this in setting performance targets and in assessing the relative economic merit of alternative development projects. Life cycle maintenance plans are prepared for all network assets – including transformers and switchgear, as well as the lines themselves.

Interruptions to the electricity supply can be planned or unplanned. Planned interruptions generally arise from the need to carry out maintenance, refurbishment or upgrading on the network. Powerco sometimes undertakes ‘live line’ repair work when this is justified by the economic cost of any loss of supply. Even given a rigorous inspection and maintenance regime, unplanned interruptions on parts of the network still occur.

Unplanned interruptions can arise within all segments of the electricity supply chain. They are caused by a wide variety of factors - including trees or animals interfering with lines, cars hitting poles, cables being accidentally excavated, faulty equipment, and adverse weather – including high winds, lightning strikes and heavy rain giving rise to land subsidence. Trees, or their branches, are one source of interference that consumers themselves can often help to avoid.

In urban environments, particularly larger city centres, the low and medium voltage lines are usually highly inter-connected – with alternative supply routes being available in the event of break in some segment. In rural areas, on the other hand, it is much more expensive to put a "back-up" supply in place. Some other options are available, however.

Powerco has set reliability targets for each "type" of feeder. Although these targets may not necessarily be achieved in every location every year they reflect the levels of feeder performance that the company is aiming towards providing throughout the network as a whole.

From time to time Powerco conducts surveys, or consults individual customers, regarding levels of satisfaction with network performance and to improve its own understanding of consumer views on the relative economic merit of alternative development projects.