Transpower House, 96 The Terrace,

PO Box 1021, Wellington,

New Zealand

Telephone +64-4-495 7000

Facsimile: +64-4-495 7100

Howard Cattermole
www.transpower.co.nz
Tel: (04) 495 7077
Fax: (04) 495 7100
Howard.cattermole@transpower.co.nz

22 February 2006

Jenny Walton
Electricity Commission
PO Box 10041
Wellington

By e-mail

Dear Jenny,

Proposed Rule Change to Indications and Measurements

Transpower has reviewed the proposed rule changes to the indications and
measurements section of Technical Code C of Schedule C3 of part C and makes the
following response to the questions asked by the Commission.

A. General Comments

1. Maximum interval between indications and measurements.

Question 3 of the consultation paper asks for the frequency of data refresh between
Asset Owners (third party) and the Grid Owner remote terminal unit (RTU). However,
Transpower believes rule 4.3 does not make it clear whether the requirement that
information must be updated every 6 seconds, applies to updating information to the
Grid Owner RTU, or to the System Operator interface. The drafting of rule 4.3 should
be changed, in order to clarify that the frequency of data updates relates to data
provided to the Grid Owner RTU.

2. Accuracy of measurement.

2.1 Issues with increasing accuracy

A definite accuracy for each measurement point can only be obtained by accuracy
testing of all the measurement components at defined intervals. Achieving such
conclusive accuracy is likely to be expensive. For example, Transpower estimates
the cost of accuracy testing all the required Grid Owner measurements at $20 million
per assessment. Transpower believes there is not demonstrable benefit in accuracy
testing all components to justify the expense and time required to do the tests.

•
Transpower submission on Indications and Page 2 of 8
Measurements
22 February 2006

Transpower considers the most reasonable approach for the Grid Owner to take to
the question of measurement accuracy is to estimate the most likely limit of error.
This estimate would be calculated by combining the errors, from the accuracy class,
of measurement equipment components such as the voltage transformers, current
transformers, and transducers using quadratic addition (root mean square). The
justification for using this approach is discussed in Landis & Gyr monograph No. 26,
reference AS/E 264 16601 OF “Criteria for the Choice of Impulse Frequency in
Impulse Operated Average Value Recorders” and in “Basic Electrical Measurements”
by M.B. Stout page 45.

As an example of this approach, consider a voltage measurement with a class 0.5

voltage transformer (maximum error +/- 0.5%) and class 0.5 transducer (maximum
error +/- 0.5%). The most likely limit of error calculated using quadratic addition is
approximately 0.7%.

Following the assessment of accuracy, the Grid Owner would accuracy test a sample
of those measurements that failed the assessment. This would, in our view, give a
reasonable representation of actual errors associated with measurements which had
failed the accuracy assessment.

Transpower questions the unqualified use of the term ‘reasonable endeavours’ in the
rules. Transpower’s interpretation of what constitutes reasonable endeavours may
not be representative of other asset owners’ views. Given the stated importance the
paper places on measurement accuracy, Transpower does not see how an
undefined “reasonable endeavours” obligation will deliver a consistent and
acceptable accuracy standard across all assets and from all asset owners.
Effectively, and in the absence of any guidance as to what constitutes ‘reasonable
endeavours’ in this context, the standard of accuracy would become whatever a
participant can reasonably argue it to be. Importantly, there is no proposal in the
draft rules to move progressively (or directly) to an improved standard over a defined
period.

Further, Transpower is doubtful that asset owners will apply for dispensation from an
obligation to use reasonable endeavours to meet the accuracy standard. There
would be no incentive for them to do so. Indeed, in many situations there will be
every incentive for asset owners not to do so. This is especially the case where there
is an argument available to support a claim of reasonableness of their current
compliance efforts.

In the absence of a definition of what “reasonable endeavours” entails for each asset
owner and each asset, it is difficult to determine what incentive there will be for any
asset owner to measure actual asset performance accuracy. As such, Transpower
does not believe the present proposal will promote international best practice,
improve measurement accuracy, provide increased support for the System Operator
to meet its PPOs or incentivise asset owners to measure or improve the accuracy
standard over time.
Transpower submission on Indications and Page 3 of 8
Measurements
22 February 2006

Transpower also doubts it will be easy, or indeed possible, to apply one standard of
“reasonable endeavours” across a range of participants, each with materially different
circumstances

2.2 Consequences of poor accuracy

If measurement accuracy is poor, then the circuit flows and state estimator results will
be correspondingly poor in the SCADA/EMS system. Such inaccuracies are likely to
be reflected in the management of constraints, with the effect being that constraints
may bind when they would not otherwise do so (if measurement accuracy was
greater) and vice versa. The System Operator PPOs may be placed at increased
risk in circumstances where the actual flow on a circuit is greater than that indicated.

In such circumstances, a constraint may not show as binding in the schedules and in
the security tools, but may bind in reality. Consequently, a contingent event could
lead to cascade failure and the potential for asset damage in extreme cases due to
much lower than expected off load times. This potential is particularly relevant
where the constraining circuit is on the 110kV system for a circuit trip on the 220kV
system, where only small changes in flow greatly reduce equipment off load times.

The Dispatch Objective is equally affected where a binding constraint in the final
pricing schedule changes prices and costs consumers.

Transpower’s view is, given that compliance with the accuracy standard is not
realistically able to be achieved immediately, the rules should set a direction for
improved compliance over a defined period. This would ensure a progressive
improvement and support the premise of the paper that measurement accuracy is a
significant factor in secure operation and management of the grid.

2.3 Transpower’s proposed solution

Transpower believes there is a workable solution to the trade-off, outlined above,

between the costs of testing and calibrating all measuring equipment, and the risks to
system operation due to reliance on inaccurate data. That solution essentially
requires asset owners to meet the accuracy requirements, but allows them to apply
for an exemption where the cost of ensuring compliance would outweigh the benefit
and there is a replacement plan in place. Transpower encourages the Commission to
consider adopting the following drafting:

4.2. Subject to rule 4.3, the asset owner must ensure that the accuracy of
measurements provided to the system operator complies with the levels set
out in the tables in appendix A;

4.3. Where the asset owner believes on the basis of accuracy assessment
that it is unable to meet the requirements of rule 4.2 in relation to
measurements from any existing measuring equipment ("non-compliant
measuring equipment"), it must notify the system operator and the Board
as soon as practicable. Where the asset owner can satisfy the Board that:
Transpower submission on Indications and Page 4 of 8
Measurements
22 February 2006

4.3.1 the cost of replacing the non-compliant measuring equipment

with new measuring equipment which will enable the asset owner to
comply with the levels set out in the tables in appendix A outweighs
the benefit which would result from compliance; and

4.3.2 the asset owner has a replacement policy to replace the non-
compliant measuring equipment with new equipment which will
enable the asset owner to comply with the levels set out in the
tables in appendix A; and

4.3.3 the timeframe for replacement of the non-compliant measuring

equipment is reasonable

the Board will grant an exemption from compliance with the requirements of
rule 4.2 in relation to measurements from the relevant measuring equipment.
The Board will advise the system operator of any such exemption.

For the purposes of rule 4.3 accuracy assessment means assessment of

measuring equipment by (i) combining the errors from the accuracy class of
measurement equipment components using quadratic addition (root mean
square); and (ii) accuracy testing all the measurement equipment
components in a sample of the measurement equipment that fails the
quadratic addition assessment.

3. Cost

Transpower has indicated previously costs to provide missing measurements and

indications. Please refer to Report on Grid Owner Incremental Costs incurred to
comply with Draft Measurement/Indication obligations dated 12 April 2005. Any costs
excluded from this report have been included below.

4. Specific indications

4.1. Grid interface disconnector status.

“Closed to earth” indication has been included in Table A2 but is not in either Table
A1 or Table A3. It is Transpower's understanding that “closed to earth” indication is
not required and it should therefore be removed from Table A2.

4.2. Grid interface auto reclose status

It is Transpower's understanding that auto reclose status is only required for grid
circuits.

4.3. Off-load tap position indication.

It is Transpower's understanding that the current manual update of tap position in

SCADA meets this requirement. There are 40 off-load tap positions not provided in
SCADA. The estimated cost to provide manual updated indications for these tap
positions is $16,000.
Transpower submission on Indications and Page 5 of 8
Measurements
22 February 2006

4.4. Bus voltage

It is Transpower's understanding that bus voltages are only required on grid bus
assets i.e. those buses at which the SO must manage voltages and or equipment
within specific voltage ranges.

4.5. Inter-trip status

It is Transpower's understanding that these indications are only required for special
protection schemes. There are 8 schemes which require some modifications to
provide the required indications. The cost to modify the schemes to automatically
provide the indications has not been assessed. The enabling/disabling or changing
of the rating of these schemes is manually done on site. The cost of providing
manual updated indications is estimated to be $4,800.

5. Relationship between rule 4.1 and rule 5

Rule 5 sets out the specific requirements for data transmission communication, and
requires asset owners to have in place a primary means of transmitting data to the
System Operator and a backup means, to be used if the primary means is
unavailable or the System Operator has otherwise agreed to its use. Rule 4 requires
asset owners to provide the indications and measurements shown in Appendix A to
the System Operator in accordance with the rule (presumably rule 5, but yet to be
specified) on requirements for data transmission communications. Transpower
believes that rule 4.1 must expressly (and without room for doubt) require the
indications and measurements shown in Appendix A to be provided using the primary
means of data transmission communication (or backup means, if relevant) as
specified in rule 5 (as opposed to any other mechanism). In Transpower’s view, the
proposed wording of rule 4.1, is too general.

The wording “in accordance with rule [5]” should be replaced with the following:
"using the primary means of data transmission communication specified in [rule 5.1]
or, where relevant, the backup means of data transmission communication specified
in [rule 5.2.]".

B. Questions asked by the Commission

1. What should be added to the proposed list of indications and measurements

required? Please give reasons for your view.

Transpower would like to add three more measurements to the table. The System
Operator needs to manage asset loading to avoid cascade failure and asset damage.
As such, it requires the Grid Owner to provide Circuit Amps, MW, and MVAr at each
termination point of a circuit. The non-inclusion of this information in its original
submission was an oversight.
Transpower submission on Indications and Page 6 of 8
Measurements
22 February 2006

All these measurements are currently provided to the System Operator by the Grid
Owner and no additional cost will be incurred as a result of this change.

2. What should be removed from the proposed list of indications and

measurements required? Please give reasons for your view.

Grid Interface disconnector “closed to earth” status should be removed from Table
A2.

3. How many of your sites provide indications and measurements to the grid
owners RTU at intervals?

Not applicable to Transpower.

4. Do you agree with the +/- 2% accuracy requirement? Please give reasons for
your view.

Transpower agrees with the level of accuracy proposed, subject to our previous
comments above and proposed rule change.

5. What costs would be incurred in measuring the accuracy of existing

equipment

Transpower estimates the cost of measuring the accuracy of all measurements to be

$20M per assessment.

On the other hand, assessing the accuracy using the method we propose above in
Section A, Item 2, is estimated to cost $100,000. Additional costs would be incurred
for accuracy testing a sample of any measurements which failed the accuracy
assessment. The estimated cost of testing a sample of measurements consisting of
10 voltage, 10 current and 10 watt/var measurements is $64,000. However the actual
sample size cannot be determined until the assessment of accuracy has been
completed.

In total, Transpower’s proposed approach is expected to lead to significantly lower

overall costs of compliance.

6. What timeframe should be allowed for existing equipment that does not meet
the accuracy standard to be made compliant? Please give reasons for your
view

Transpower’s view is that the timeframe to make existing measurement points

compliant should be based on the normal equipment life cycle replacement
programme. On this basis no fixed time is required in the rules.
Transpower submission on Indications and Page 7 of 8
Measurements
22 February 2006

7. Do you agree with the Commission’s assessment of this proposal? Please

give reasons for your view.

The first stated objective of the proposal is to require provision of the necessary
indications and measurements to the System Operator so it can comply with its
PPOs. The amended list of indications is considered to be an improvement to the
existing situation and will better support the System Operator meeting the PPOs. For
the reasons outlined in A 2 above, Transpower does not believe the rule changes
proposed in the EC’s consultation paper in relation to accuracy will support the
System Operator in complying with its PPOs. However, Transpower has suggested
alternative rule changes, in A2 above, which it believes will address these concerns.

The second stated objective of the proposal is to provide a practical and cost-
effective solution to operational communications. As a ‘stand alone’ objective,
Transpower believes it to be met by the proposal. However, it is not appropriate to
consider this objective in isolation from other objectives, as to do so would result in
an unbalanced and unworkable outcome.

The third stated objective is to avoid incremental investment for existing assets where
there would be no appreciable enhancement in quality levels. For measurement
accuracy, Transpower is of the view that, where the “no appreciable enhancement“
circumstance exists, the exemption procedure Transpower proposes is the better
course. There appears to be no additional benefit that arises from the proposed rule.

C. Detailed rule drafting.

In addition to the above comments and suggested drafting in A2, Transpower has the
following comment on the drafting of the rules

Rule Ref Comment Recommendation

4.1 Need to create a clearer link Refer to paragraph A5 above for drafting
between rule 4.1 and rule 5 of the
operational communications rule
change proposal.

4.2 The reference to "Grid Owner" Replace "Grid Owner" with "System
should be to "System Operator" Operator".

Need to better qualify the

accuracy requirements (refer to
paragraph A2)
4.3 It is not clear whether the
requirement to update data every
6 seconds applies to data
provided to the Grid Owner RTU
Refer to paragraph A2 above for drafting
The rule should specify that the interval
refers to the frequency of data refresh
between Asset Owners and the Grid
Owner RTU.
Transpower submission on Indications and Page 8 of 8
Measurements
22 February 2006

Rule Ref Comment Recommendation

or to the System Operator
interface.
Appendix Table A2 includes “closed to “Closed to earth” indication for grid
A earth” indication for grid interface interface disconnectors to be deleted
disconnectors whereas Tables A1 from Table A2.
and A3 do not.

Yours sincerely

Howard Cattermole
Regulatory Strategy Manager