RCP2 Portfolio Overview Document

Transcription

1 RCP2 Portfolio Overview Document Portfolio: Expenditure Class: Base Capex Expenditure Category: Grid Replacement & Refurbishment As at date: 15 November 2013 Expenditure Forecast Real 2012/13 NZ$ (m) Total CAPEX Description Deliverables The AC Stations Other Station Equipment portfolio includes Low Voltage Alternating Current (LVAC) panels for distribution of local service power to station equipment, Neutral Earthing Resistors (NERs) which limit fault currents and ensure the correct operation of protection equipment when an earth fault occurs, Surge Arresters (SAs) to protect equipment from over-voltages due to lightning strikes or switching surges, oil containment facilities, earth grids to ensure electrical safety during earth fault conditions, and Outdoor Junction Boxes (ODJBs) which provide a cabling interface point in the switchyard for most of the critical control and protection functions of the station. We are moving from a relatively reactive approach to management of these assets during RCP1 (due to a focus on larger primary assets) to a more proactive approach during RCP2. During RCP2 we are replacing LVAC panels that have worn components or do not meet current design standards, the last of the legacy SAs, and a number of ODJBs. In our planning for the RCP2 period we have made a number of improvements over the RCP1 approach including increased focus on lifecycle costing, improved approach to cost estimation and prioritisation on the basis of criticality and site strategies. During RCP2 we will improve our asset knowledge for this fleet of assets particularly ODJBs and LVAC equipment to support future asset management decisions. During RCP2, the portfolio will involve the following programmes: replacement of LVAC panels at 34 sites; replacement of all remaining gap type SAs (two at Rangipo substation and four at New Plymouth substation); and 1

2 Objectives Expenditure Drivers Benefits replacement of 37 ODJBs. While they are part of this portfolio, no expenditure is included here for some ACS Other equipment types, as the work is carried out as part of other projects 1. Key objectives of the programmes are as set out below. Safety Zero fatalities and injuries while maintaining, repairing or installing other station equipment. Service performance Design and condition of local service systems at key substations is commensurate with the risks associated with sustained loss of 400 V supply. Cost performance Minimise whole-of-life costs by taking the capital and maintenance costs into consideration during procurement decisions and by seeking extended warranties for new equipment; and further reduce model diversity to help reduce maintenance costs. New Zealand Communities Oil containment facilities minimise spills of oil to the environment. The key driver underlying the programme of LVAC works is the management of failure risk, which in most cases is driven by condition of the assets. A large number of LVAC panels are in deteriorated condition, and some also do not satisfy our current design standards 2. Further rationale for replacement is that in some of our largest sites the local service equipment does not meet current security and reliability expectations. Local service power provides very important services at substations loss of local service power can have immediate consequences (shut down or operational restrictions) for the operation and capability of some major equipment such as synchronous condensers, SVCs and power transformers. Extended loss of local service supply will lead to discharge of critical station batteries supplying control and protection systems, which can ultimately have significant consequences in the event of a power system fault. The other projects within this programme are relatively small. The replacement of the remaining legacy (gap type) surge arresters is driven by the greater unreliability of this technology (regardless of condition) and concerns about their ability to perform the required functions safely. Replacement of ODJBs is required as a result of deteriorating condition. The expected benefits of the programmes during RCP2 are: 1 Oil containment system upgrades and Surge Arrester installations are typically carried out when Power Transformers are replaced associated costs are included in the Power Transformer portfolio. Earth grids are typically extended or partially replaced when new assets are installed no earth grid replacement works are planned that are not part of another project. NERs are typically installed when Power Transformers are replaced, or during outdoor to indoor switchyard conversions no individual NER replacement works are planned. 2 The current design standard specifies a main 400 V switchboard and a separate LVAC panel for essential supplies. Presently at some small stations the LVAC panels and the switchboards are combined. In these cases a new main 400 V switchboard will be installed when the LVAC panel is replaced. 2

3 safety: replacement of legacy surge arresters will address concerns regarding ability to perform their functions safely service performance: failure rates of local service power equipment will be minimised, with flow on effects for security and reliability. Appropriate physical segregation from other services will be enabled as part of the replacement. New surge arresters will be of a more reliable technology asset condition: the replacement of legacy surge arresters and deteriorating LVAC panels will improve the average condition of the fleets; and fleet diversity: standardising the LVAC system when the LVAC switchboards are replaced will have benefits in terms of increased flexibility and reliability. Forecasting Approach (Quantity) Cost Estimation (unit cost) Risk management Interventions for this disparate fleet have been defined based on their condition and technology, and informed by their relative criticality to the network. LVAC panel replacement is required to ensure reliable operation, given the age and condition of the existing panels. Our current design standard specifies a main 400 V switchboard and a separate LVAC panel for essential supplies. At some small stations these are combined, and in these cases a new main switchboard will be installed when the panel is replaced. Based on current age and condition, we have estimated that 34 LVAC panel replacements will be required during RCP2. Replacement of legacy surge arresters is driven by poor reliability and safety concerns. Only six of the gap surge arresters remain in service, and all of these are to be replaced during RCP2 two at Rangipo substation, and four at New Plymouth substation. Replacement of ODJBs is on the basis of replacement criteria, which include condition (severe corrosion), having exposed live terminals and connections, having insufficient space or clearances to install additional equipment, and failure to meet seismic requirements. Approximately 37 ODJB replacements are scheduled for RCP2. Options analysis The only options to consider in relation to the programmes set out above relate to the timing of replacements, such as, replace upon failure or replace prior to failure. The first option would result in deteriorating asset health which does not manage safety and performance risk, and as such is not acceptable to us. Replacing prior to failure is the proposed approach, and will manage safety, reliability and performance risks. Most of the proposed works are reasonably repetitive with largely similar scopes. As such, they are categorised as volumetric works for estimation purposes. Like other volumetric estimates, the costs are estimated using the TEES (US Cost) system using formal building blocks based on historic cost outturns from completed, equivalent works in the portfolio. No contingency amounts are included in the cost estimates. Assumptions The assumptions made in applying the volumetric cost methodology include: the unit cost for a surge arrester replacement is approximately $52k the unit cost of an LVAC panel is approximately $91k, and a panel and switchboard together is approximately $116k the unit cost of replacing an ODJB is approximately $50 k the sample size of historic works is sufficiently large to provide a symmetric distribution for the cost 3

4 a large number of equivalent projects will be undertaken in future cost building blocks based on historic out turn costs capture the impact of past risks volumetric estimates are to be determined using the TEES (US Cost) system; and scope is reasonably well defined and reflects a predetermined list of standard building blocks applied to all estimates. Total forecast capital expenditure for RCP2, shown on the chart below, is $5.5m, comprising $3.3m for LVAC panel and switchboard replacements, $1.9m for ODJB replacements, and $0.3m for surge arrester replacements. - Forecast Expenditure $3.5m $3.0m $2.5m RCP1 RCP2 Forecast Expenditure $2.0m $1.5m $1.0m $0.5m 0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 All figures are real 2012/13 Expenditure Trends Overall capital expenditure is at a similar level to the average annual capex in RCP1. Governance One of our business planning processes is a dedicated challenge and approvals process which is applied to large capex portfolios 3. The objective is to ensure that the rationale for a proposed programme and the forecast cost for the work is robust and has been effectively challenged at appropriate management levels. This is particularly important for larger portfolios such as this one. For the purpose of preparing our proposal additional steps were introduced into the governance process. For the Other Station Equipment portfolio, this included cost estimation review, and challenge and approval by the portfolio owner prior to challenge and approval by the RCP2 Advisory Team. This cross-functional group challenged the overall programme, particularly looking at prioritization of expenditure across portfolios. The Capital Governance Team (including General Managers and the Chief Executive) performed a further challenge round before proposed RCP2 expenditure forecasts were submitted to the Board. The Board has reviewed the R&R expenditure in aggregate. 3 Projects are approved as part of a programme of work at this stage, not as individual projects. 4

5 Deliverability of the proposed work has been challenged in the context of other planned works, the expected level of field resources and available outage windows. Interdependencies Procurement Deliverability Supporting Documents and Models The equipment described in this POD supports primary equipment such as circuit breakers, disconnectors, indoor switchgear, power transformers, reactive power, secondary systems, and substation management systems. Where possible, replacement of the assets discussed in this POD will be carried out as part of a larger project that replaces or upgrades the associated equipment, for example, power transformer, circuit breaker, etc. Our integrated works planning (IWP) process allows for coordination of works to minimise disruption and cost. We procure equipment such as surge arresters under Period Supply Agreements (PSAs). Following an open tender process, prequalification of all suppliers is required prior to any purchasing. The level of resource and cost allocated to the prequalification process is dependent on the perceived risk of the product and supplier. Installation is generally carried out by our regional maintenance service providers, though some work may be put out to tender, based on factors such as cost and availability of the expertise required to perform the work. Deliverability of the proposed work has been challenged in the context of other planned works, the expected level of field resources and available outage windows The planned level of works is not substantially higher to historical work programmes and no deliverability issues are envisaged. Documents This POD is a high level overview of the portfolio. Further information and details on the programmes can be found in the following document: FS11 - Fleet Strategy ACS Other Primary Equipment Departure from policies and standards This portfolio does not involve any departures from policies, planning standards, or consultant recommendations. Models No models were developed in relation to this portfolio. 5