Wanganui - Stratford Investment Proposal. Attachment B Costing report

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1 Wanganui - Stratford Investment Proposal Attachment B Costing report September 2009 Document Revision Control

3 TABLE OF CONTENTS 1 Introduction Purpose Document structure Background The existing system Existing equipment Transmission costs Upgrade Options Loss comparison Short List Options Cost Summary Dismantling costs Replacement costs Coyote ACSR Conductor upgrade option costs Operating and maintenance costs...14 All rights reserved 3

4 1 Introduction 1.1 Purpose The purpose of this report is to describe the process and outcomes of costing the short-list options for the Wanganui-Waverley-Hawera-Stratford Investment Proposal. Costs were developed for the like for like replacement conductor, dismantling options, and other types of conductor. High level analysis was conducted to determine the optimum upgrade conductor type. 1.2 Document structure This document forms part of the Wanganui-Waverley-Hawera-Stratford Investment Proposal as illustrated below: 2 Background 2.1 The existing system The 110kV Wanganui-Waverley-Hawera-Stratford A transmission line sections are located in the western Central North Island. They service the Wanganui, Waverley, Hawera and Stratford grid exit point loads, connect Patea (32 MW) and Whareroa (50MW) generation at Hawera, and provide through transfer between Stratford and Bunnythorpe. All rights reserved 4

5 Most of the existing 110 km transmission line consists of copper conductor 19/2.34 rated at 50 C with a summer/winter rating of 51/62 MVA. Figure 2-1 shows how this transmission line is connected to the rest of the network and the parallel higher capacity 220 kv transmission network. Figure 2-1: Existing transmission circuits between Bunnythorpe and Stratford Moturoa 11 kv Waikato Huntly Te Kowhai New Plymouth 55 kv 220 kv Carrington Street Huirangi Motunui 220 kv Taumarunui Stratford Opunake 220 kv Kapuni Taranaki Combined Cycle Patea Whareroa Hawera 220 kv Brunswick KEY 220kV CIRCUIT 110kV CIRCUIT 50/66kV CIRCUIT SUBSTATION BUS TRANSFORMER TEE POINT LOAD 11 kv Waverley Wanganui Mataroa Bunnythorpe CAPACITOR 220 kv Marton 55 kv (NZR) Whakamaru Tangawai Mangahao Wilton/Linton Haywards 2.2 Existing equipment Table 2-1 shows the conductor and ratings of the two existing transmission circuits between Wanganui and Stratford. Most of the line is presently operated at 50 C, with a winter rating of 51 MVA, and consist predominantly of either wooden or concrete single circuit pi-poles. A small section of the line through the urban section of Wanganui is strung with Coyote. Table 2-1: Existing transmission lines Line Circuit Conductor Summer Conductor Rating Wanganui-Stratford-A HWA-SFD-1 Cu 50 o C 51MVA, 268A 62MVA, 325A Wanganui-Stratford-A HWA-WVY-1 Cu 50 o C 51MVA, 268A 62MVA, 325A Wanganui-Stratford-A WGN-WVY-1 Cu 50 o C 51MVA, 268A 62MVA, 325A 1 2 The circuit s winter capacity is presently limited by bus section rating of 1870A. The circuits between Bunnythorpe and Wanganui do not have circuit breaker protection at Marton. This means that any maintenance on the line takes out the whole circuit from Bunnythorpe to Marton and on to Wanganui. Winter All rights reserved 5

6 The existing conductor is 78 years old and the conductor condition of the line has met Transpower s replacement criteria. Due to the requirements of NZS 6869, the option of replacing the existing Pigeon conductor with Pigeon is not possible as it exceeds Radio Frequency Interference (RFI) requirements. Coyote ACSR/AC has been considered as the modern equivalent replacement conductor1. The parameters for the Coyote conductor, operating at 50 C, are shown in the table below. Table 2-2: Like for like replacement Circuit Length (km) Conductor & Temperature Winter Rating (MVA) Stratford Hawera 1 27 Coyote 50 C 57.1 Hawera - Waverley 35 Coyote 50 C 57.1 Waverley - Wanganui 48 Coyote 50 C Transmission costs The process of costing a transmission solution is a process of refining the cost estimates over time, recognising there is a trade-off between cost accuracy and timely and efficient investment decisions. This is similar to any cost estimation process where, as more detailed design is undertaken, costs become more refined. This is illustrated in Figure below which sets out at each stage what level of detail is undertaken. 1 Coyote diameter is 15.9mm compared with existing copper 12.8mm. All rights reserved 6

7 Figure 2-2 Transmission Costing Process Bottom-up asset estimation costs are generally subject to the orders of accuracy outlined above. This also demonstrates the level of information required to accurately estimate the costs associated with a particular project. The transmission costs used in this project have been summarised into the following components: line capital costs; substation capital costs; property and easement costs; environmental costs; project management; and operating and maintenance costs. Transpower comments on each of these factors below. Line capital costs Transpower has considered the capital costs of the equipment that would be incurred prior to the commissioning of each option, including line works and any HV All rights reserved 7

8 cable works required for each option. New transmission line costs are based on indicative costing corridors only. They include dismantling costs as required. Substation capital costs Transpower has considered the capital costs of the substation equipment that would be incurred prior to the commissioning of each option, including any HV cable works required for each option. Property and easement costs Transpower has taken into account the probable range of property and easement costs as relevant for each short-listed option. Environmental costs The costs associated with obtaining RMA approvals and other relevant approvals have been estimated and taken into account for works contemplated in the short-list of options. Project management costs Transpower has allowed for project management costs to reflect the cost of managing the design, construction and commissioning of works to be undertaken for each short-list option. Operating and maintenance costs Operating, maintenance and dismantling costs over the operating life of each shortlisted option are included in the analysis. 3 Upgrade Options This section details how the proposed upgrade option of reconductoring with Nobelium AAAC was derived from a range of conductors. This was done by assessing the cost and the associated loss benefits of each conductor. Five conductor upgrade options were considered upgrading the line as detailed in Table 3-1 below. Table 3-1: Upgrade options Conductor and temperature Rating (MVA) Conductor Diameter (mm) Coyote@ Wolf@ Neon@ Nobelium@ Nobelium@ / High level analysis was conducted on these options to assess the relative loss benefits of each option using the average current flow through the circuits from the 2007 calendar year. All rights reserved 8

9 3.1 Loss comparison Nobelium AAAC was selected from a range of conductors by assessing the cost and the associated loss benefits of each conductor relative to the like-for-like Coyote ACSR replacement conductor. The costs consisted of the lines capital costs required to re-conductor all three sections of the Wanganui-Stratford transmission line. The losses were derived from static estimates of the transmission losses associated with each conductor type, using medium demand growth rates from the 2008 SoO. The cost of the losses is a weighted average of the long-run marginal generation costs estimated from the 2008 SoO market development scenarios. The results of this analysis are shown in the table below: Table 3-2: Conductor type cost-benefit analysis (2009$M) Conductor Type Net Cost Net Benefits Net Market Benefit Hyena ACSR/AC Coyote ACSR/AC Wolf ACSR/AC Neon AAAC/ Nobelium AAAC/ These results show that the Nobelium AAAC/1120 conductor has the greatest net market benefit of the potential upgrade conductor types. As a result, it was selected as the upgrade conductor for the purposes of the Grid Investment Test. 4 Short List Options Cost Summary The short list options presented in this Investment Proposal are shown below: Table 4-1: Short List Options Short List Options Reference case Option 1 Reconductor Stratford Hawera with Coyote at 50 C. Dismantle Hawera Waverley and Waverley Wanganui. Connect Waverley to 220 kv. Reconductor Stratford Wanganui with Coyote at 50 C. Option 2 Option 3 Option 4 Option 5 Reconductor Stratford Wanganui with Nobelium at 90 C. Reconductor Stratford Hawera with Coyote at 50 C. New single circuit Stratford Hawera. Dismantle Hawera Waverley. Reconductor Waverley Wanganui with Coyote at 50 C. Reconductor Stratford Hawera with Coyote at 50 C. New single circuit Stratford Hawera. Reconductor Hawera Waverley with Coyote at 50 C. Dismantle Waverley Wanganui. Reconductor Stratford Hawera with Coyote at 50 C. New single circuit Stratford Hawera. Dismantle Hawera Waverley. Dismantle Waverley Wanganui. Connect Waverley to 220 kv. All rights reserved 9

10 Short List Options Option 6 Option 7 Option 8 Reconductor Stratford Hawera with Nobelium at 90 C. New single circuit Stratford Hawera. Dismantle Hawera Waverley. Reconductor Waverley Wanganui with Nobelium at 90 C. Reconductor Stratford Hawera with Nobelium at 90 C. New single circuit Stratford Hawera. Reconductor Hawera Waverley with Nobelium at 90 C. Dismantle Waverley Wanganui. Reconductor Stratford Hawera with Nobelium at 90 C. New single circuit Hawera Stratford. Dismantle Hawera Waverley. Dismantle Waverley Wanganui. Connect Waverley to 220 kv. 4.1 Dismantling costs The table below shows the lines dismantling costs for the Wanganui-Stratford sections. Table 4-2: Dismantling WGN-SFD Section Costs ($000s) including Scope Allowance Line sections Lines dismantling Subs dismantling Lines project management Subs project management Loss of statutory rights - Note 1 Environmental consents SFD-HWA n/a 941 HWA-WVY 1, WVY-WGN 2,100 1,430 Note 1- The value of the loss of statutory rights is calculated using 15% of land value of the statutory easement area using current QV data, but these values have not been included in the GIT analysis. 4.2 Replacement costs Coyote ACSR The tables below detail the cost components for a replacement option of stringing Coyote ACSR/AC at 50 C being the most similar practical replacement conductor. Table 4-3: Substation Costs ($000s) including Scope Allowance Coyote ACSR/AC Substation Costs Design, procure and build 115 Total 115 All rights reserved 10

11 Table 4-4: Line Costs ($000s) including Scope Allowance Coyote ACSR/AC Line Costs WGN-WVY Pole Structure Supply 4,761 Conductor Supply 1,741 Insulator Supply 525 Erection 19,261 Survey/Design 1,097 Project Management 524 Total 27,909 Table 4-5: Property and Consenting Costs ($000s) including Scope Allowance Coyote ACSR/AC Property and Consenting Costs WGN-SFD Property 325 Consenting 100 CommunityCare 130 Total 555 Table 4-6: Total Costs ($000s) including Scope Allowance Coyote ACSR/AC Total Costs WGN-SFD Substation 115 Line 27,909 Property and consenting 555 Total 28, Conductor upgrade option costs At the proposed maximum operating temperature of 90 C, with Nobelium conductor, there are 360 pole structures that need replacement due to condition assessment or strength, or have reduced clearances to ground, roads, undercrossing conductor/structures or buildings. All rights reserved 11

12 Vertical clearances were assessed allowing an additional 0.5m, to take into account potential inaccuracies in conductor sagging and estimation of creep. These clearance issues can generally be addressed by changing pole heights. The tables below detail the cost components for the upgrade of stringing Nobelium AAAC at 90 C. Table 4-7: Substation Costs ($000s) including Scope Allowance Nobelium AAAC Substation Costs Design, procure and build 1,449 Total 1,449 Table 4-8: Line Costs ($000s) including Scope Allowance Nobelium AAAC Line Costs WGN-WVY Pole Structure Supply 4,761 Conductor Supply 2,371 Insulator Supply 525 Erection 20,689 Survey/Design 1,143 Project Management 616 Total 30, Property costs The works required to upgrade to Nobelium AAAC conductor have been assessed in terms of the injurious affection test contained in Section 23(3)(b) of the Electricity Act 1992 (the Act) and in terms of the current understanding and interpretation of the Act. The project has been assessed following a visual inspection and it is reasonably anticipated that there are situations that, as a result of the works being undertaken, injurious affect may occur. In these cases, where confirmed by valuation evidence, easement property rights will be acquired by negotiation. Costs associated with securing the necessary access right such as legal costs, valuation costs, travel, Transpower time, survey, documentation and registration have been included only for those number of properties for which injurious affection has been reasonably anticipated. There has been no allocation of costs assumed for any access issues that may arise Environmental costs The Wanganui Stratford line traverses land within the jurisdiction of three district councils and two regional councils. Cost estimates are based on obtaining the necessary RMA approvals (certificates of compliance and/or resource consents) as well as engaging Councils, key stakeholders and potentially affected parties during project planning through to implementation. As there is some uncertainty as to when All rights reserved 12

13 the National Environmental Standard on Transmission will be ratified this year (alongside RMA reforms), the assumption has been made that RMA approvals will need to be sought pursuant to the rules set out in the relevant District and Regional Plans CommunityCare Fund Transpower's CommunityCare Fund was developed from the recognition that Transpower needs to offset the impact on communities of major grid investment projects and contribute to communities where we operate, particularly those communities which accommodate Transpower assets which benefit the whole country. The Fund has been developed along similar models used by other power companies in New Zealand and overseas. Through the fund, Transpower supports projects that benefit the community as a whole. Transpower's community funding approach is aligned with project approval and is based on a funding formula derived from an impact analysis and the number of kilometres of line in an impacted area. The impact scale is determined on a number of factors, including the size of the line required, the impact of the line within the region it traverses and the population of the communities it crosses. The visual impact of the line is dealt with through environmental mitigation. For the Wanganui-Stratford project, a CommunityCare Fund allocation of $132,000 has been added. Once a Grid Upgrade Proposal is approved by the Electricity Commission, community organisations may apply to the CommunityCare Fund for nominated projects that meet specific funding criteria. The CommunityCare Fund is managed in accordance with the guidelines established by the Office of the Auditor General (OAG). Table 4-9: Property and Consenting Costs ($000s) including Scope Allowance Nobelium AAAC Property and Consenting Costs WGN-SFD Property 4,900 Consenting 100 CommunityCare 132 Total 5,132 Table 4-10: Total Costs ($000s) including Scope Allowance Nobelium AAAC Total Costs WGN-SFD Substation 1,449 Line 30,105 Property and consenting 5,132 Total 36,686 All rights reserved 13

14 4.4 Operating and maintenance costs Annual operating and Maintenance costs have been estimated based on historical data. Following completion of the project structure replacements will not be required for several years and this is reflected in the average. Table 4-11: Operating and Maintenance Costs ($000s) 20 year average O & M $/pa WGN-SFD Structure replacement 264 Insulation and hardware 24 Maintenance activity 244 Vegetation 200 Total 732 All rights reserved 14

HVDC Inter-Island Link Upgrade Project. Investment Proposal. Part V Project Costs

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