Annual Planning Report 2012 - Transpower

Chapter 1: IntroductionStatusBase CapexInformation onlyDefinitionanalysis.Development projects forecast to cost less than $5 million, or projects that arereplacement or refurbishment on existing assets. These proposed projects arefunded under approved Base Capex allowance.Descriptions of issues that are likely to be managed operationally or by customerdriven investment. Specific projects are not formulated either because it is tooearly to do so, or because alternative low-cost options are evident.1.4.2 Investment purposeWe classify transmission network development projects by their investment purpose,consistent with our capital expenditure regulatory framework, the Capital ExpenditureInput Methodology (Capex IM). Table 1-2 lists the development projectclassifications.Table 1-2: Regulatory investment typeInvestment purposeDefinitionTo meet Grid ReliabilityStandard (core grid/notcore grid)To provide net marketbenefitCustomer-specificMinor enhancementReplacementThe Grid Reliability Standard (GRS) is an n-1 standard for assets listed on theCore Grid (Schedule 12.3 of Electricity Industry Participation Code).For all other assets, the GRS is an economic standard which mustdemonstrate the proposed investment returns benefits greater than theforecast cost of the investment.Projects that must demonstrate market benefits greater than costs.Enhancement projects on assets specific to a customer or group of customerswhich are agreed and paid for under a new investment contract betweenTranspower and the customer/group of customers.Projects that are less than $5 million and are not Customer-specific.Replacement projects on assets driven by condition assessment.All investments greater than $5 million are subject to the Investment Test of theCapex Input Methodology. Base Capex investments greater than $20 million(replacements) must also be based on economic analysis which is consistent with theInvestment Test.1.4.3 Generation proposalsTable 1-3 summarises the generation proposal classifications used throughout theAPR.Table 1-3: Generation proposals classificationsStatus Definition Consideration in APRCommittedLikely toproceedProjects for which:land for the project has beenacquiredresource consents have beenobtained, andbusiness approval has beenobtained.Projects for which the following areunder way or close to beingobtained:procuring land for the projectapplication for resource consent,andbusiness approval.The project will be:considered explicitly in Transpower’sassessment of transmission issues anddevelopment options, anddescribed in the main body of the text.The project will be considered as:part of the generation scenarios described inChapter 5, ora sensitivity assessment, if it does not fit withinany of the generation scenarios described inChapter 5. In this case, the APR will describethe project in a separate section under theregional plans, including its possible impact onthe transmission network and development142012 Annual Planning Report © Transpower New Zealand Limited 2012. All rights reserved.