Transcript Network Operations

The National Grid Experience
Chris J Murray
Network Operations Director
Reforming the Electricity Industry
in Saudi Arabia
Developing role - BETTA
Transmission Owners
Scottish Hydro
Electric
Transmission
Scottish Power
GB System
Operator
How we got here - our heritage
National Grid
NGT rebrands to
National Grid - a
Acquired UK consistent
operations of identity in the
Crown Castle UK and the USA
and rebranded
to NGW
Energis
Electricity
Privatisation
1990
NGC
Acquired
Public
Acquired
Niagara
flotation NEES/ EUA Mohawk
1995
2000
2002
NATIONAL
GRID
2005
NATIONAL
2006
GRID
TRANSCO
1986
1990
Privatisation of
British Gas
(1986)
Lattice
1995
2000
Demerger Demerger
Centrica
Lattice
(1997)
2002
Acquiring
Keyspan and
Rhode Island
in US
New Group Organisation
SHE and Corporate Responsibility
CEO
Strategy
Group HR
Public affairs
Global IS
Steve Holliday
Internal audit
Co. Secretary / General Counsel
Transmission
Gas
distribution
Nick Winser
Mark Fairbairn
UK Electric T
UK Gas T
UK Gas D
US Electric T
US Gas T
US Gas D
Electric
distribution
Cheryl LaFleur
(acting)
US Electric D
US Generation
Business
development &
non regulated
Edward Astle
Business
Development
Finance &
Shared Services
Wireless
Metering
Grain, Property
UK Shared
Services
US
Wireless
US Shared
Services
Basslink
Advantica
Core Financial
Functions
FDs/CFOs
Steve Lucas
National Grid’s Regulatory Framework
Electricity Act
Utilities Act
Energy Act
Elec.Transmission Licence
Grid Code / BSC /
CUSC/SQSS/STC
Competition Act (OFT)
Electricity Safety,
Quality & Continuity
Regulations
Legislative Framework – Electricity
 Regulator’s
duties under Electricity/Utilities
Act:
 Protect
interests of consumers wherever
appropriate by promoting effective competition;
 Having regard to:
 Need
to secure all reasonable demands for electricity
are satisfied
 Need to secure license holders can finance
authorised activities
 The interests of disadvantaged individuals
Legislative Framework – Electricity
 Transmission
Licensees duties under
Electricity/Utilities Act:
 Develop
& maintain an economic, efficient and
co-ordinated transmission system
 Facilitate competition in generation & supply
 Have regard for environmental impacts.
The case for separation:
Separation of SO from generation, retailing and
network ownership ensures non-discriminatory
selection of system services.
 In particular, separation of SO & TO:

 Improves
confidence of generators that network
investments are not selected in preference to generation
services
 Removes potential for bias between alternative
transmission owners and potentially facilitates
competitive appointment of transmission owners for new
assets
The case for integration:

Facilitates innovation across the SO to TO
interface:
 Simple
to align incentives on joint SO/TO and internalise
network externalities of SO & TO activities on
congestion, losses & reliability
 No need to separate energy balancing from network
management costs (the reserve/constraint interaction)
 No transaction costs from SO/TO interface nor overhead
of adapting such an interface to develop new processes
 Avoids barriers to innovation due to information
constraints between SO & TO
Weighing up the materiality

Potential for distortion if SO &
generation affiliated

High – potential distortion of competitive
energy market

Potential for distortion if SO &
transmission ownership affiliated

Low – SO & TO both subject to
monopoly regulation & controls

Materiality of SO/TO innovation
& effective incentivisation

Med/High (in experience of National
Grid)

Tx costs fallen by 50% in real-terms since
privatisation in 1990 due to:

All these have required
innovation across the SO/TO
interface


Substation de-manning & remote
operation
Condition & risk based maintenance
Balancing costs have been reduced by:




Focused & adaptive tx maintenance
scheduling
Development & use of dynamic equipment
ratings (e.g. use of cable temp monitors)
Implementation of live-line working
Development of relocateable reactive
compensation
Increased utilisation of existing assets
Overhead lines
Matthew 620 mm2 GZTACSR (Gap -Type)
High Temperature Aluminium
Alloy Trapezoidal Strands
3100
134% improvement
over base
3000
Gap - Packed with High
Temperature Silicone Compound
2500
High Strength
Steel Core
2420
MVA @ 400kV
2180
Network Engineering
2010
2000
1500
1900
1320
1000
500
0
1974
400 ACSR
1985
500 AAAC
1992
500 AAAC
1993
570 AAAC
1998
570 AAAC
2000
GAP CONDUCTOR
Conclusions

Separate SO & TO:
 Facilitates
important separation of SO & generation in
vertically integrated utilities (without difficulties and
delays associated with transmission asset divestment)
 Gives theoretically ideal non-discriminatory framework
for SO purchase of generation, supplier and transmission
services (but sufficient non-discrimination by SO given
affiliation with TO can be achieved through regulation)
 Introduces significant challenges in establishing
incentives and a framework for innovation (which in
many material cases requires development of the SO/TO
interface)
Conclusions continued
Do separate SO from integrated generation & TO
 Avoid separation of SO & TO if both already
separate from generation

National Grid

Brings value from excellent asset management as
a transmission owner

Brings value from excellent system operation

Has scope to bring the most value when
integrating both SO & TO responsibilities
Thank you
Chris J Murray
Contact: [email protected]