Attachment 6.4
ESCoSA:
SA Power Networks
Jurisdictional Service Standards
for the 2015-2020 Regulatory
Period Final Decision
May 2014
SA POWER NETWORKS JURISDICTIONAL SERVICE
STANDARDS FOR THE 2015-2020 REGULATORY PERIOD
Final Decision
May 2014
Version 2
Enquiries concerning this Final Decision should be addressed to:
Essential Services Commission of South Australia
GPO Box 2605
Adelaide SA 5001
Telephone:
Freecall:
E-mail:
Web:
(08) 8463 4444
1800 633 592 (SA and mobiles only)
[email protected]
www.escosa.sa.gov.au
The Essential Services Commission of South Australia is the independent economic regulator of
the electricity, gas, ports, rail and water industries in South Australia. The Commission’s
primary objective is the protection of the long-term interests of South Australian consumers
with respect to the price, quality and reliability of essential services. For more information,
please visit www.escosa.sa.gov.au.
TABLE OF CONTENTS
Glossary of terms _______________________________________________________________ ii
Executive summary ______________________________________________________________1
1.
Introduction _______________________________________________________________4
2.
Network reliability service standards and targets __________________________________12
3.
Customer service standards and targets _________________________________________29
4.
GSL Scheme_______________________________________________________________31
5.
Performance monitoring and public reporting framework ___________________________38
6.
Next steps ________________________________________________________________42
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
i
GLOSSARY OF TERMS
AEMA
Australian Energy Market Agreement
AEMC
Australian Energy Market Commission
AEMO
Australian Energy Market Operator
AER
Australian Energy Regulator
Commission
Essential Services Commission of SA
DNSP
Distribution Network Service Provider
Electricity Act
Electricity Act 1996
ESC Act
Essential Services Commission Act 2002
GSL Scheme
Guaranteed Service Level Scheme
IEEE
Institute of Electrical and Electronics Engineers
MED
Major Event Day
NEL
National Electricity Law
NEM
National Electricity Market
NER
National Electricity Rules
NERL
National Energy Retail Law
NERR
National Energy Retail Rules
STPIS
Service Target Performance Incentive Scheme
TMED
Major Event Day threshold value
USAIDI
Unplanned System Average Interruption Duration Index
USAIDIn
Unplanned System Average Interruption Duration Index (normalised
to exclude MED)
USAIFI
Unplanned System Average Interruption Frequency Index
USAIFIn
Unplanned System Average Interruption Frequency Index (normalised
to exclude MED)
VCR
Value of Customer Reliability
ii
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
EXECUTIVE SUMMARY
The Essential Services Commission of South Australia (Commission) is the independent
economic regulator of essential services in South Australia. In undertaking its regulatory
functions, the Commission’s primary objective is the protection of the long-term interests of
South Australian consumers with respect to the price, quality and reliability of essential
services.1
Economic regulation of SA Power Networks is undertaken jointly by the Commission and the
Australian Energy Regulator (AER). The Australian Energy Market Agreement (AEMA)
provides for State and Territory Governments to retain responsibility for developing service
reliability standards to ensure network security and reliability.
SA Power Networks is subject to five yearly regulatory determination periods. The current
period will end on 30 June 2015.
The Commission has developed two sets of standards to apply for the 2015-2020 regulatory
period: network reliability standards and customer service standards. Under the National
Electricity Law (NEL) and National Electricity Rules (NER), the AER assesses the efficient
expenditure for distribution services overall, including consideration of the expenditure
required to deliver the service levels determined by the Commission, and determines the
allowed revenues and prices for distribution network service providers (DNSPs).
A component of the AER’s revenue determination for SA Power Networks is the Service
Target Performance Incentive Scheme (STPIS).2 The AER’s STPIS is a national incentive
scheme, providing incentives for DNSPs operating in the National Electricity Market (NEM)
to maintain and improve service performance. The STPIS establishes targets based on
historical levels of performance, and provides incentives to DNSPs in the form of financial
rewards for meeting targets and financial penalties for a failure to meet targets.
Consultation to develop this Final Decision
The Commission consulted with the South Australian community to develop the
jurisdictional service standards to apply to SA Power Networks for the next regulatory period
2015-2020 by releasing an Issues Paper3 in March 2013 and a Draft Decision4 in
November 2013.
The Commission’s Final Decisions
The Commission has formed the view that consistency between the parameters of the AER’s
STPIS and the jurisdictional service standards is of primary importance for the next
regulatory period 2015-2020, in order to:
1
2
3
4
Essential Service Commission Act 2002, section 6(a).
Refer NER, rule 6.6.2(b)(3).
Refer http://www.escosa.sa.gov.au/projects/194/sa-power-networks-service-standard-framework-2015-to2020.aspx#stage-list=0.
Refer http://www.escosa.sa.gov.au/projects/194/sa-power-networks-service-standard-framework-2015-to2020.aspx#stage-list=2.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
1

minimise the potential for conflicting incentives between the elements of the service
standard framework and the AER’s pricing regime, thus minimising the potential for
unwarranted costs being borne by South Australian consumers; and

ensure appropriate incentives are provided to SA Power Networks to maintain current
service levels and only improve service levels where the value to customers exceeds the
cost of those improvements.
SA Power Networks’ 2015-2020 service standards are as follows.
Network reliability service standards and targets
The reliability of SA Power Networks’ distribution network will be measured by the
frequency and the duration of unplanned interruptions. The network performance service
standards will be set to reflect differences in the levels of interconnection and redundancy in
SA Power Networks’ physical network across the state. This will result in four broad
categories of feeders (CBD, Urban, Rural Short and Rural Long), regardless of the geographic
location of the individual feeder. Recognising that the shift to setting reliability service
standards on the basis of network feeder types is less meaningful for customers seeking to
understand the levels of reliability they receive, SA Power Networks will be required to
continue to report on reliability performance outcomes in the seven current geographic
regions and explain departures from longer term average performance outcomes. This will
also allow the Commission to monitor whether the shift to feeder types results in any
degradation of average historical performance at a regional level.
The network reliability targets (to be set by the end of 2014) will require SA Power Networks
to use its best endeavours to provide network reliability in line with its average historical
performance in the period 2009/10 to 2013/14. The reliability targets will exclude SA Power
Networks’ performance during severe or abnormal weather events using the IEEE MED
exclusion methodology. This approach will allow major events to be studied separately from
SA Power Networks’ daily operations, and in the process, to better reveal trends in daily
operation that would be hidden by the large statistical effect of major events. This will
enable identification and analysis of the impact of abnormal weather conditions on reliability
performance, as opposed to the impact of more mild weather (and other factors) on
underlying reliability performance.
Customer service standards and targets
There will be no changes to the current customer service standards and targets. SA Power
Networks will be required to continue to use its best endeavours to meet the following
customer service responsiveness targets:

85 per cent of telephone calls answered within 30 seconds; and

95 per cent of written enquiries responded to within 5 business days.
2
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
GSL Scheme
SA Power Networks will be required to continue to make GSL payments to customers
experiencing service below the current pre-determined thresholds. The Commission will
introduce a new long duration supply interruption GSL payment of $605 for single
interruptions in excess of 48 hours. To maintain the value of the original GSL payments, the
GSL payment amounts for the 2015-2020 regulatory period will be increased to reflect
movements in CPI from June 2005 to December 2013, rounded to the nearest $5.00.
The Commission notes that GSL payments are made in recognition of the inconvenience
caused to customers, rather than attempting to reflect the full (and different) costs incurred
by individual customers in response to a long interruption. SA Power Networks’ will
continue to administer its separate customer compensation scheme for damage or losses
resulting from an incident associated with SA Power Networks’ electricity distribution
network.
Performance monitoring and reporting
The performance monitoring and reporting framework will focus on four particular areas of
SA Power Networks’ performance:

reliability performance outcomes for customers in geographic regions against average
historical performance;

operational responsiveness and reliability performance during MEDs;

identification and management of individual feeders with ongoing low-reliability
performance; and

assessment of the number of GSL Scheme payments made in each geographic region.
The Commission’s assessment of SA Power Networks’ performance will be publicly reported
in the Annual Performance Report.
Finalising the reliability service standard targets
The final network reliability targets will be established once data for 2013/14 are available,
with final targets set in late 2014. Public consultation will occur on the consequential
amendments to relevant regulatory instruments.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
3
1.
INTRODUCTION
The Essential Services Commission of South Australia (Commission), established under the
Essential Services Commission Act 2002 5 (ESC Act), is the independent economic regulator of
essential services in South Australia. In undertaking its regulatory functions, the
Commission’s primary objective is the protection of the long-term interests of South
Australian consumers with respect to the price, quality and reliability of essential services.6
SA Power Networks7 is the owner and operator of the main electricity distribution network
in South Australia. Economic regulation of the electricity distribution services provided by
SA Power Networks is undertaken jointly by the Commission and the Australian Energy
Regulator (AER).
The Commission’s powers and functions in relation to SA Power Networks are contained in
the Electricity Act 1996 (Electricity Act) and the Australian Energy Market Agreement
(AEMA).8
Under the Electricity Act, SA Power Networks is required to hold a licence authorising it to
operate the electricity distribution system in South Australia. The Commission is the
licensing authority for the purposes of the Electricity Act. The Electricity Act mandates
certain licence terms and conditions, while providing the Commission with the discretionary
power to include additional licence terms and conditions.
In addition, the AEMA provides for State and Territory Governments to retain responsibility
for developing service reliability standards to ensure network security and reliability
(jurisdictional service standards). The Commission is responsible for developing,
implementing and administering the jurisdictional service standards for SA Power Networks.
SA Power Networks is subject to five yearly price determination periods, regulated by the
AER under the National Electricity Law (NEL), National Electricity Rules (NER), National
Energy Retail Law (NERL) and National Energy Retail Rules (NERR). The current period ends
on 30 June 2015.
It is appropriate for the Commission to consider and review the jurisdictional service
standards prior to the commencement of a new price regulation period for SA Power
Networks. This Final Decision is the result of the Commission’s consultation with the South
Australian community to develop the jurisdictional service standards to apply to SA Power
Networks for the next regulatory period 2015-2020.
5
6
7
8
4
Refer http://www.legislation.sa.gov.au/LZ/C/A/Essential%20Services%20Commission%20Act%202002.aspx.
ESC Act 2002, section 6(a).
Formerly ETSA Utilities.
Annexure 2 of the Australian Energy Market Agreement 2004 (AEMA) provides for State and Territory
Governments to retain responsibility for developing service reliability standards to ensure network security
and reliability. The Commission is responsible for developing the jurisdictional network reliability service
standards in South Australia. The AEMA as last amended in December 2013 is available at
http://www.scer.gov.au/files/2014/01/Final-Amended-AEMA-Dec-2013-signed.pdf.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
1.1
The service standard framework
The current Service Standard Framework for SA Power Networks9 is comprised of three
interrelated elements:

average reliability and customer service standards and targets (set by the
Commission);10

a symmetrical financial incentive scheme that provides rewards/penalties to SA Power
Networks for achievement against reliability and customer service targets (set by the
AER);11 and

a Guaranteed Service Level Scheme (GSL Scheme) that provides payments to customers
receiving service levels below pre-determined threshold levels within any single year
(set by the Commission).
The average standards and GSL Scheme form the jurisdictional service standards established
under the AEMA.
The Commission’s Annual Performance Reports assess and publicly report on SA Power
Networks’ performance against the current service standards and targets.12 The AER also
reports on SA Power Networks’ performance in its State of the Energy Market reports.13
1.1.1
Service standard regulation
There is an inherent trade-off between prices and service levels; higher service levels may
provide extra benefits to customers, but also raise costs and prices. The competitive process
optimises the price/service mix by providing consumers with the service they most prefer
given the price of increasing that level of service. As monopolies, electricity distributors,
such as SA Power Networks, are not subject to competitive forces in relation to the price and
quality of the distribution services they provide. Coupled with price (or revenue) regulation,
service standard regulation seeks to determine efficient service levels for distribution
services, given the absence of a competitive market.
The Commission has determined that two areas of electricity distribution service warrant
regulation: electricity supply reliability and customer service responsiveness.
1.1.2
Consulting customers on service standards
A key element in providing confidence that expenditures are prudent and efficient is
evidence that service levels reflect customer preferences. To properly achieve that,
customers need to be informed on service level/cost trade-offs when providing evidence of
9
10
11
12
13
For details on the Commission’s ETSA Utilities Service Standard Framework Review for the 2010-2015
Regulatory Period, refer http://www.escosa.sa.gov.au/projects/85/electricity-distribution-servicestandards-2010-to-2015.aspx.
Refer http://www.escosa.sa.gov.au/electricity-overview/codes-guidelines/electricity-codes.aspx.
Refer http://www.aer.gov.au/node/7967.
Refer http://www.escosa.sa.gov.au/electricity-overview/reporting-and-compliance/annual-performancereports.aspx.
Refer http://www.aer.gov.au/publications/state-of-the-energy-market-reports.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
5
their preferences (i.e. customers need to be in a position to assess whether their preference
would be for a lower/higher level of service in return for a stated reduction/increase in bills).
In the past, the Commission conducted consumer research to understand the aspects of
electricity distribution services most valued by customers and their willingness to pay for
these services and/or improvements to them. 14 The Commission then invited the
community to participate in its review process to determine the service standards and
targets, which were incorporated into SA Power Networks’ regulatory proposal.
The NER now require SA Power Networks to engage with its customers directly and
demonstrate how customer concerns have been taken into account in developing its
revenue proposal for the AER. 15 SA Power Networks undertook a customer survey as part of
its broader customer engagement program.16
The reliability and customer service standards and targets set by the Commission are drivers
(although not the only drivers) 17 of the capital and operating expenditure requirements for
SA Power Networks. The AER evaluates the price that SA Power Networks would charge, for
the levels of service determined by the Commission, if it operated efficiently and makes a
price/revenue determination to apply for a predetermined period of time: a “regulatory
control period”.
1.1.3
Average standards
A key consideration in setting average standards is the interaction between those standards
and the AER’s Service Target Performance Incentive Scheme (STPIS).18 As is shown later, the
Commission has determined that it will establish the standards to align with the STPIS to
minimise any conflicting incentives between the two schemes.
The STPIS is a component of the AER’s revenue determination for SA Power Networks. The
AER’s STPIS is a national incentive scheme, providing incentives for DNSPs, such as SA Power
Networks, operating in the National Electricity Market (NEM) to maintain and improve
service performance.
The STPIS establishes targets based on historical levels of performance, and provides
incentives to DNSPs in the form of financial rewards for meeting targets and financial
penalties for a failure to meet targets.
14
15
16
17
18
6
Customer surveys were conducted by the Commission in 2003 and 2007. Refer
http://www.escosa.sa.gov.au/library/030916-PublicConsumerSurvey-KPMG.pdf and
http://www.escosa.sa.gov.au/library/071130-ConsumerPreferenceElectricityServiceStandardsMcGregorTanResearch.pdf.
Refer NER Rule 6.5.6(5A) and Rule 6.5.7(5A). The AER released its Consumer Engagement Guideline for
Network Service Providers in November 2013. The guideline develops a principles-based framework to
assist electricity and gas network service providers in developing consumer engagement strategies and
approaches to apply across their business and assist in preparing regulatory proposals that reflect the long
term interests of their consumers. Refer http://www.aer.gov.au/node/18894.
Details on SA Power Networks’ consumer engagement activities to develop its regulatory proposal for the
2015-2020 regulatory period are available at http://www.talkingpower.com.au.
Expenditure on meeting peak demand needs is generally a more significant driver of expenditure than the
Commission’s standards.
Refer NER, rule 6.6.2(b)(3).
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
SA Power Networks’ current STPIS reliability targets are based on the following parameters:

Unplanned System Average Interruption Duration Index (USAIDI) and Unplanned System
Average Interruption Frequency Index (USAIFI) performance (from 2005/06 to 2008/09),
with the impact of Major Event Days (MEDs) removed from the assessment of reliability
performance;19 and

separate USAIDI and USAIFI targets for four network feeder categories (CBD; Urban;
Rural Short and Rural Long).20
SA Power Networks’ current STPIS customer service target is based on telephone answering
performance (from 2005/06 to 2008/09), with the impact of MEDs removed using the
Institute of Electrical and Electronics Engineers (IEEE) exclusion methodology.
The STPIS is the main financial incentive mechanism in the broader service standard
framework for SA Power Networks, currently providing an overall revenue risk of ±3 per
cent21, including ±0.3 per cent 22 for the telephone answering parameter. It is used by the
AER to decide the service standards financial reward or penalty component of a distribution
price determination.
The STPIS aims to ensure that efficiency improvements made by DNSPs are not at the
expense of deterioration in the service performance for customers. The STPIS is designed to
encourage SA Power Networks to improve its performance where customers are willing to
pay for these improvements. Incentive rates are calculated by reference to the value that
customers place on supply reliability (termed the value of customer reliability or VCR).
The AER’s framework and approach paper 23 sets out its likely approach in the forthcoming
distribution price determination, including how the STPIS is to be applied.
19
20
21
22
23
The IEEE standard 1366-2012 includes a methodology to identify Major Event Days (MED) in which the daily
SAIDI exceeds a MED threshold value (TMED). Statistically, days having a daily system SAIDI greater than TMED
are days on which the energy delivery system experienced stresses beyond that normally expected (such as
during severe weather events). Activities that occur on MED should be separately analysed and reported.
The AER approved the use of the “Box-Cox” method for the purpose of setting the MED boundary as SA
Power Networks demonstrated that using the natural logarithm did not result in a normal distribution when
daily SAIDI data was converted. Refer http://www.aer.gov.au/sites/default/files/Final%20decision%20SA%20distribution%20determination%202010-11%20to%202014-15.pdf, pp. 194-202.
Refer Table 2.2 of this paper for further detail on the four feeder categories.
Clause 2.5 of the STPIS provides that the maximum revenue increment or decrement (the “revenue at risk”)
for the scheme components in aggregate for each regulatory year within the regulatory control period must
lie between +5 per cent (the upper limit) and –5 per cent (the lower limit).
Clause 5.2 of the STPIS provides that the revenue at risk for all customer service parameters must lie
between +1 per cent (the upper limit) and –1 per cent (the lower limit). The maximum revenue increment
or decrement (the revenue at risk) for an individual customer service parameter for each regulatory year of
the regulatory control period must lie between +0.5 per cent (the upper limit) and –0.5 per cent (the lower
limit).
The AER commenced consultation on the development of the framework and approach for the next
distribution determination for SA Power Networks for 2015-2020 by issuing a discussion paper in
December 2013. The final paper will be released by 30 April 2014. Refer
http://www.aer.gov.au/node/20941.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
7
Consistency between the parameters of the STPIS24 and the jurisdictional service standards
is of primary importance for the next regulatory period 2015-2020, in order to:

minimise the potential for conflicting incentives between the elements of the service
standard framework and the AER’s pricing regime, thus minimising the potential for
unwarranted costs being borne by South Australian consumers; and

ensure appropriate incentives are provided to SA Power Networks to maintain current
service levels and only improve service levels where the value to customers exceeds the
cost of those improvements.
Based on South Australian customers’ continuing high levels of satisfaction with average
reliability and customer service performance, there appears to be no need to increase the
levels of service set, and hence the cost associated with meeting those levels, in the
Commission’s jurisdictional service standards. The Commission will set the average
reliability and customer service standards and targets to maintain the average historical
levels of service provided by SA Power Networks. The final decisions on the reliability
service standards and targets are discussed in Chapter 2 and customer service standards and
targets are discussed in Chapter 3.
1.1.4
Guaranteed Service Level Scheme
The average network reliability and customer service standards and the AER STPIS are based
on SA Power Networks’ average performance as experienced by groups of customers. In
contrast, the Commission’s current GSL Scheme25 provides payments to individual customers
who receive service that does not meet the separately defined levels of service in the
following areas:

timeliness of appointments, connection of a new supply address and repair of faulty
street lights; and

frequency and duration of supply interruptions.
The Commission will retain responsibility for the GSL scheme26 and introduce a new long
duration supply interruption GSL payment of $605 for single interruptions in excess of
48 hours. The reasons for the Commission’s final decisions on the GSL Scheme are discussed
in Chapter 4.
1.1.5
Performance monitoring and reporting
Performance monitoring and reporting promotes transparency around SA Power Networks’
performance against the service standards and targets. It is a useful tool for informing
24
25
26
8
Both the Productivity Commission and the AEMC have recently confirmed the importance of the STPIS to
provide the main financial incentive mechanism in the continuing development of the national framework.
Clause 1.1.4 of the Commission’s Electricity Distribution Code establishes the requirements for the current
GSL scheme. Refer http://www.escosa.sa.gov.au/electricity-overview/codes-guidelines/electricitycodes.aspx.
While all NEM jurisdictions currently have some form of GSL scheme, and the AER’s STPIS provides a GSL
scheme where a jurisdiction does not establish one, no jurisdiction has currently adopted the AER's scheme.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
customers about the level of service they are receiving (at an aggregate level) and identifying
reasons for any poor performance.
The Commission’s proposed performance monitoring and reporting framework will focus on
four particular areas of SA Power Networks’ performance:

reliability performance outcomes for customers in geographic regions against average
historical performance;

operational responsiveness and reliability performance during MEDs;

identification and management of individual feeders with ongoing low-reliability
performance; and

assessment of the number of GSL Scheme payments made in each geographic region.
The reasons for the Commission’s final decisions on the performance monitoring and
reporting framework are discussed in Chapter 5.
1.2
Consultation to develop the service standard framework
for the 2015-2020 regulatory period
The Commission has consulted with the South Australian community to develop the
jurisdictional service standards to apply to SA Power Networks for the next regulatory period
2015-2020.
Initial feedback was sought on whether the current jurisdictional service standards were
important to, and valued by, SA Power Networks’ customers, through the release of an
Issues Paper27 in March 2013. The submissions to the Issues Paper expressed general
support for continuation of the current jurisdictional service standards.28
The Draft Decision,29 released in November 2013, reflected this support by proposing to
maintain the broad elements of the jurisdictional service standards for the 2015-2020
regulatory period. The key change proposed in the Draft Decision was the need for greater
consistency between the parameters of the AER’s STPIS and the jurisdictional service
standards for the reasons outlined in section 1.1.3.
To achieve this consistency, it was proposed that network reliability service standards and
performance targets should be set:

to reflect the difference in the average historical reliability levels of feeders for four
categories of feeders, based on the customer load, line length and network redundancy
of individual feeders (rather than the geographic location of the feeder);

based on five years’ average historical performance (rather than four years); and
27
28
29
Refer http://www.escosa.sa.gov.au/projects/194/sa-power-networks-service-standard-framework-2015-to2020.aspx#stage-list=0.
Refer http://www.escosa.sa.gov.au/projects/194/sa-power-networks-service-standard-framework-2015-to2020.aspx.
Refer http://www.escosa.sa.gov.au/projects/194/sa-power-networks-service-standard-framework-2015-to2020.aspx#stage-list=2.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
9

using reliability data that has removed the impact of qualifying MEDs to identify trends
in underlying network performance (i.e. normalised USAIDI and USAIFI).
The Commission received four submissions30 on its Draft Decision:

Business SA;

Kangaroo Island Futures Authority;

South Australian Council of Social Service (SACOSS); and

SA Power Networks.
In developing the jurisdictional service standards for SA Power Networks for the 2015-2020
regulatory period, the Commission has:

considered and reviewed matters raised in the written submissions and undertaken
further research as to practices and matters relevant to the setting of the jurisdictional
service standards;

engaged with its Consumer Advisory Committee to discuss the proposed jurisdictional
service standards and arranged for SA Power Networks’ to provide the Committee with
a briefing on its consumer engagement strategy;

participated in SA Power Networks’ consumer engagement and consultation process, by
observing several of SA Power Networks’ stakeholder forums and providing input into
the service standard-related elements of the online customer questionnaire;

reviewed the relevant documents related to the development of a national approach to
setting network reliability standards, including:
- the Productivity Commission’s final report on Electricity Networks Regulatory
Frameworks;31
- the Australian Energy Market Commission’s (AEMC) final report on its Review of the
National Framework for Distribution Reliability;32 and
- the AER’s Consumer Engagement Guideline for Network Service Providers, 33
Framework and Approach paper34 and STPIS;35 and

30
31
32
33
34
35
10
consulted with the AEMC, the AER and the South Australian Government’s Department
for Manufacturing, Innovation, Trade Resources and Energy (DMITRE) and SA Power
Networks to discuss matters relating to the current review and future processes for
setting jurisdictional service standards.
Refer http://www.escosa.sa.gov.au/projects/194/sa-power-networks-service-standard-framework-2015-to2020.aspx.
Refer http://www.pc.gov.au/projects/inquiry/electricity/report.
Refer http://www.aemc.gov.au/market-reviews/completed/review-of-the-national-framework-fordistribution-reliability.html.
Refer http://www.aer.gov.au/node/18894.
Refer http://www.aer.gov.au/node/20941.
Refer http://www.aer.gov.au/node/7967.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
The Commission has been assisted by the submissions it has received through this review
process. The Commission has carefully considered the issues raised by stakeholders through
the consultation period and, where relevant, incorporated the suggestions into this Final
Decision. Where appropriate, the Commission has, either by direct quotation or by
reference to themes or arguments, mentioned certain arguments and submissions in the
text to assist stakeholders to understand the positions it has reached; however, a failure to
reference an argument or submission does not mean that the Commission has not taken
that argument or submission into account in its deliberations. While the Commission has
not adopted all positions put in submissions, all submissions have been helpful in informing
the consideration of each of the relevant issues and the competing viewpoints.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
11
2.
NETWORK RELIABILITY SERVICE STANDARDS AND
TARGETS
In establishing the jurisdictional service standards for network reliability, the Commission
has considered:

the appropriate measures of reliability to be used;

the basis on which performance will be measured and reported (geographic regions or
feeder categories); and

the appropriate target for each measure.
The reliability of SA Power Networks’ distribution network will be measured by the
frequency and the duration of unplanned interruptions. The network performance service
standards will be set to reflect differences in the levels of interconnection and redundancy in
SA Power Networks’ physical network across the state. This will result in four broad
categories of feeders (CBD, Urban, Rural Short and Rural Long), regardless of the geographic
location of the individual feeder. Recognising that the shift to setting reliability service
standards on the basis of network feeder types is less meaningful for customers seeking to
understand the levels of reliability they receive, SA Power Networks will be required to
continue to report on reliability performance outcomes in the seven current geographic
regions and explain departures from longer term average performance outcomes. This will
also allow the Commission to monitor whether the shift to feeder types results in any
degradation of average historical performance at a regional level.
The network reliability targets (to be set by the end of 2014) will require SA Power Networks
to use its best endeavours to provide network reliability in line with its average historical
performance in the period 2009/10 to 2013/14. The reliability targets will exclude SA Power
Networks’ performance during severe or abnormal weather events using the Institute of
Electrical and Electronics Engineers’ MED exclusion methodology. This approach will allow
major events to be studied separately from SA Power Networks’ daily operations, and in the
process, to better reveal trends in daily operation that would be hidden by the large
statistical effect of major events. This will enable identification and analysis of the impact of
abnormal weather conditions on reliability performance, as opposed to the impact of more
mild weather (and other factors) on underlying reliability performance.
The Commission’s reasons for its final decisions on each of these matters are set out below.
2.1
Measures of reliability
Most reliability indices are average values of reliability data for a particular reliability
characteristic for an entire system, operating region, substation service territory, or feeder. 36
36
12
The Institute of Electrical and Electronics Engineers (IEEE) standard 1366-2012 presents a set of terms and
definitions that can be used to foster uniformity in the development of distribution service reliability
indices, to identify factors that affect the indices and aid in consistent reporting practices among utilities. It
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
The Commission currently uses two reliability indices to measure SA Power Networks’
sustained interruptions:37

System Average Interruption Duration Index (SAIDI): a measure of the total duration of
sustained interruptions for the average customer over the course of a year. For a fixed
number of customers, SAIDI can be improved by reducing the number of interruptions
or by reducing the duration of interruptions; and

System Average Interruption Frequency Index (SAIFI): a measure of how often the
average customer experiences a sustained interruption over the course of a year. For a
fixed number of customers, the only way to improve SAIFI is to reduce the number of
sustained interruptions experienced by customers.
Together, SAIDI and SAIFI measure how long and how frequently customers are without
electricity supply, on average. In the 2010-2015 regulatory period, the Commission set
reliability service standards based on unplanned sustained interruptions;38 technically
considered Unplanned System Average Interruption Duration Index (USAIDI) and Unplanned
System Average Interruption Frequency Index (USAIFI), as any planned interruptions were
not included in the targets.39
2.1.1
Summary of submissions
SA Power Networks supports the continuation of USAIDI and USAIFI to measure and set
reliability service standards, noting that it employs these measures internally to track
reliability performance.
However, SA Power Networks’ submission on the Draft Decision advised that its current
reliability targets would need to be increased if the current exclusion of planned
interruptions less than 15 minutes is not continued beyond 30 June 2015.40 SA Power
Networks submitted:
37
38
39
40
is intended to be utilised for both internal and external comparisons for distribution systems, substations,
circuits and defined regions. While not an Australian/International Standard, IEEE standard 1366-2012 has
been adopted (in part) in Australia. For example, the AER STPIS adopts the IEEE methodology for
determining MEDs. Refer http://standards.ieee.org/findstds/standard/1366-2012.html.
A sustained interruption is any interruption not classified as a part of a momentary event. A momentary
interruption is the brief loss of power delivery to one or more customers caused by the automated opening
and closing operation of an interrupting device. SA Power Networks is not currently required to report on
momentary interruptions.
The Commission determined that the reliability service standards and targets for 2010-2015 should only
target unplanned sustained interruptions as customers are generally notified of planned interruptions and
can plan accordingly. In order to ensure that there was no consumer detriment arising from this decision,
the Commission placed an increased focus on SA Power Networks’ prior notification requirements arising
under the Electricity Distribution Code.
Refer http://www.escosa.sa.gov.au/projects/85/electricity-distribution-service-standards-2010-to2015.aspx.
Under Regulation 14(b) of the National Energy Retail Law (Local Provisions) Regulations 2013, SA Power
Networks is not required to provide customers with at least four business days’ notification for planned
interruptions of less than 15 minutes. This regulation amends the requirements under Rule 90 of the NERR.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
13
For planned outages where the duration of interruption to a customer’s supply is
expected to be less than 15 minutes SA Power Networks is not currently required
to provide 4 days advance notification of this work and such interruptions are not
included in reliability targets. An example where this occurs is when we identify a
defect that is likely to fail within a few days and the defect can be repaired within
15 minutes. This practice is readily accepted by customers and SA Power
Networks receives very few complaints.
…
“SA Power Networks is in dialogue with government officials to have current
arrangements extend beyond 1 July 2015 as current arrangements deliver shorter
outage durations than will be experienced once 4 days notice is required before
defect correction work can be undertaken.41
While this decision is beyond the Commission’s control, the final reliability targets will reflect
the Government’s decision on this matter. In the event that the current arrangements are
not continued, any quantifiable changes to unplanned interruptions resulting from amended
work practices (i.e. where planned interruptions add minutes to unplanned interruptions)
will be considered in setting the final targets.
2.1.2
Commission’s consideration
The Commission will continue to use USAIDI and USAIFI to measure how long and how
frequently the average customer is without electricity supply. This ensures consistency with
the historical performance data collected by the Commission and ensures consistency with
the parameters of the AER’s STPIS.
The Commission notes that the AEMC has commenced a review to develop common
definitions for expression of distribution reliability targets across the NEM. 42 The outcomes
of the AEMC’s review will be assessed in determining the jurisdictional service standards for
the 2020-2025 regulatory period.
Final Decision
The Commission’s final decision is to continue to set reliability service standards and
targets using the USAIDI and USAIFI reliability indices.
41
42
14
Refer http://www.escosa.sa.gov.au/library/140204-SAPowerNetworksServiceStandardFramework201520_DraftDecisionSubmission-SAPN.pdf, p. 11.
On 30 January 2014, the AEMC received a request from the Standing Council on Energy and Resources
(SCER) to develop common definitions for expressing distribution reliability targets across the NEM. SCER
considers this would be a useful tool to facilitate efficient investment, increase transparency and improve
regulatory outcomes. The Review originates from a recommendation made to the SCER by the AEMC in its
Review of the National Framework for Distribution Reliability, published on 27 September 2013. Refer
http://www.aemc.gov.au/market-reviews/open/distribution-reliability-measures.html.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
2.2
Should average reliability standards vary across the
State?
Electricity distribution networks are sometimes depicted as if they are a single,
homogeneous unit; as if all customers connected to the network receive the same level of
service. In reality, network reliability will vary feeder by feeder, depending on a range of
factors. The reasons for reliability variance relate to the physical structure of the network
and the number of redundant elements it contains. Supply interruptions occur when
network elements fail. However, if there are redundant elements in a network, a failure will
not lead to a supply interruption if the electricity can be delivered through another path.
In sparsely populated areas networks are typically ‘radial’: they radiate out from a central
point with few, if any, redundant elements. In these areas it is more likely that a failure will
lead to a supply interruption, making reliability poor relative to other areas. By contrast, in
more densely populated areas networks are typically ‘meshed’ and comprise multiple
redundant elements. The reliability experienced by customers in areas where the network is
meshed is generally better than that experienced by customers supplied by radial feeders.
Improving the reliability of supply is costly in sparsely populated areas as:

the distances involved are typically long and geographically more challenging than in
other areas, which makes the cost relatively high; and

there are fewer customers to ‘share’ in the cost of the improvement, which makes the
cost per customer relatively high. 43
It follows then that network performance targets should have regard to the nature of the
underlying network and, therefore, the area the network supplies.
SA Power Networks’ distribution system is comprised of some 1,400 feeders in total. It is
not feasible to set and monitor service standards for each individual feeder for regulatory
purposes, so the Commission must consider the appropriate way to segment SA Power
Networks’ distribution network to monitor system performance. Two network
segmentation methodologies have been used in the past:

geographical regions considered to provide a reasonable representation of differences
in historical reliability performance across the State as the basis of reliability service
standards and targets and performance reporting; and

feeder categories based on feeder line length, customer load and level of redundancy to
facilitate interjurisdictional benchmarking.
Submissions were sought on whether reliability service standards and targets should
continue to be set based on the current geographic regions or whether a shift to feeder
categories should be adopted.
43
The impacts of this cost differential are partially accounted for through the application of statewide pricing
in South Australia. Statewide pricing provides for all customers in broad customer segments (i.e. residential
and small business customers) to be charged on the same basis, regardless of the actual cost of providing
services to their specific geographic locations.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
15
The benefits and limitations of each method have been considered.
2.2.1
Geographic regions
Since the 2005-2010 regulatory period, SA Power Networks’ network reliability service
standards and targets have been set based on geographic regions considered to provide a
reasonable representation of differences in historical reliability performance across the State
within seven geographic regions (Table 2.1).
A benefit of segmenting network feeders by geographic regions is that it allows customers to
compare their network reliability experience with other customers in their immediate area.
It also allows for easier identification and analysis of the impact of localised weather related
MEDs on performance against reliability targets.
The main limitation with segmenting network feeders by geographic region is the possibility
for SA Power Networks to face additional costs and conflicting incentives where the
parameters of the reliability targets and the AER’s STPIS are misaligned. 44
2.2.2
Feeder category
The Productivity Commission45 and the AEMC 46 have both recently recommended that
reliability standards should be set on the basis of feeder categories.
The network feeder categories utilised by the AER’s STPIS are designed to reflect feeder line
lengths, customer densities and the level of redundancy and interconnection in sections of
DNSPs networks. The currently employed network feeder categorisation methodology
includes four categories of feeders (Table 2.2).
In developing feeder categories that could be employed across all NEM jurisdictions, there
was concern amongst some DNSPs about the generic classification of feeders that run
through disparate demographic and environmental conditions. For example, it was noted
that the reliability (and technical supply quality) on a long feeder can potentially vary
significantly on different sections of the feeder and that separately tracking and basing the
calculation of reliability measures on the performance of individual feeder sections where
reclosers or sectionalisers are used would improve service quality monitoring. While the
proposed system of feeder classification was not widely supported by either DNSPs or statebased regulators, there was no common theme to the alternative proposals. 47
44
45
46
47
16
The Commission notes that the STPIS should take account of jurisdictional service standards in order to
avoid such misalignment (NER Rule 6.6.2(b)(2)). The current version of the STPIS does not do this in South
Australia, as it adopts a feeder category approach. In the absence of capacity for the STPIS to recognise
regions in South Australia, the Commission will act to ensure that there are no additional cost drivers arising
from any misalignment.
Refer http://www.pc.gov.au/projects/inquiry/electricity/report.
Refer http://www.aemc.gov.au/market-reviews/completed/review-of-the-national-framework-fordistribution-reliability.html.
Refer http://www.accc.gov.au/system/files/March%202002%20%20National%20Regulatory%20Reporting%20for%20Electricity%20Distribution%20and%20Retailing%20Bu
sinesses.pdf.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
Table 2.1: Network segmentation – feeders within geographic regions
ELECTRICITY DISTRIBUTION CODE REGIONS
48
PERCENTAGE
OF CUSTOMER
BASE
(AS AT
30 JUNE 2013)
Adelaide Business Area
0.3%
Major
Metropolitan
Areas
(including
Mount Barker, Mount Gambier, Port Augusta,
Port Lincoln and Whyalla). 48
71.4%
Barossa/Mid-Nth, Riverland and Murraylands
(Yorke Peninsula)
12.2%
Eastern Hills/Fleurieu Peninsula
7.5%
Upper North & Eyre Peninsula
4.7%
South East
3.4%
Kangaroo Island
0.5%
Large regional centres more likely to resemble the “urban” feeder category. Their
inclusion is supported by the Australian Classification of Local Governments, which defines
these regions as “Urban, Regional towns/cities” on the basis of their population densities
and the proportion of the population that is classified as urban for the council. Refer
http://www.regional.gov.au/local/publications/reports/index.aspx.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
Table 2.2: Network segmentation – feeders within technical categories
NETWORK
TYPE
DEFINITION
PERCENTAGE
OF CUSTOMER
BASE
(AS AT
30 JUNE 2013)
CBD feeder A feeder supplying predominantly
commercial, high-rise buildings,
supplied by a predominantly
underground distribution network
containing significant interconnection
and redundancy when compared to
urban areas.
0.3%
Urban
feeder
A feeder, which is not a CBD feeder,
with actual maximum demand over
the reporting period per total feeder
route length greater than 0.3 MVA/km.
69.3%
Short Rural A feeder which is not a CBD or urban
feeder
feeder with a total feeder route length
less than 200 km. Short Rural feeders
may include feeders in urban areas
with low load densities.
14.1%
Long Rural
feeder
16.3%
A feeder which is not a CBD or urban
feeder with a total feeder route length
greater than 200 km.
17
The benefits of segmenting network feeders in this way are that it:

recognises that the options available to restore supply during sustained interruptions
are limited by network design (e.g. it is not possible to restore power to a customer
located at the end of a single powerline through switching as the network needs
multiple sources of supply that can be rerouted); and

is consistent with the network segmentation methodology used in the AER’s STPIS and
thus minimises the potential for SA Power Networks to face conflicting financial
incentives.
The main limitation in segmenting network feeders in this way is that it does not provide the
same information to customers in relation to performance as it does to distributors and
regulators. Customers are interested in knowing how their distributor has been performing
for them (i.e. at their home, in their area), whereas regulators have an interest in
understanding the relative efficiency of the various regulated businesses.
2.2.3
Summary of submissions
In response to the Issues Paper, Business SA, the Kangaroo Island community and SACOSS all
expressed a preference for continuing the current geographic regions. The initial support for
retaining the regionally-based reliability standards and targets was based on the desire to
ensure SA Power Networks maintained focus on improving outcomes for rural and regional
customers, with concern that reliability standards and targets based on network feedertypes instead of geographic regions would allow pockets of poorly served customers to
continue, even though statewide averages will be met.
In response to concerns that a shift towards the feeder category methodology may lead to a
focus on achieving the more aggregated reliability target at the expense of a decline in the
performance within an individual geographic region, SA Power Networks submitted that its
reliability performance data demonstrates:

reliability performance for both the Adelaide Business Area and Major Metropolitan
Areas is very similar to the performance for the CBD and Urban feeder categories; and

reliability performance for rural metropolitan areas (i.e. those towns included in the
Major Metropolitan Areas region but outside Greater Metropolitan Adelaide) has not
declined over the last eight years, despite being incorporated into the aggregated Major
Metropolitan region.
On the issue of low reliability feeders, which are more likely to be located in rural and
regional areas, SA Power Networks submitted that it continuously monitors individual feeder
performance and investigates any deviation from historical performance. Any individual
customer enquiries or complaints about reliability issues are investigated at the individual
feeder level; regardless of the feeder category or geographic region.
All submissions on the Draft Decision ultimately supported reliability standards and targets
based on network feeder categories to align with the parameters of the AER’s STPIS.
However, in providing this support, consumer groups reiterated the importance of
18
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
continuing to monitor and report on low-reliability feeders and network reliability on a
regional basis.
2.2.4
Commission’s consideration
The central principle in segmenting a network to determine average reliability standards is
that reliability of supply should be similar for customers who value it similarly and are
located in places where the cost of providing it is similar. As those two parameters vary, so
should reliability standards. 49 However, a level of network segmentation will always be
required. Even feeder-based standards cannot reflect the particular price/service trade-off
for each individual customer, as only one grade of service can be provided for each feeder.
Given the importance of the financial incentives and penalties provided under the AER’s
STPIS, reliability targets will be set on a feeder-type basis to minimise the possibilities for
conflicting financial drivers and incentives for SA Power Networks. If the parameters of the
AER’s STPIS were to vary to better reflect the service/price trade-off for a future regulatory
period, the basis of the average standards would be varied accordingly.
To ensure that customers are able to assess the reliability levels they receive against
SA Power Networks’ historical performance, and performance in other areas of the state,
the Commission will continue to monitor and report on reliability performance on the
current geographical basis (refer Chapter 5).
Final Decision
The Commission’s final decision is to set different reliability service standards for
SA Power Networks by segmenting network feeders by feeder category to reflect the
differing levels of redundancy and interconnection in sections of the network.
Separate USAIDI and USAIFI targets will be set for four network feeder categories
(CBD, Urban, Rural Short and Rural Long). This will align with the network
segmentation methodology used in the AER’s STPIS as currently established.
2.3
Reliability targets: maintain, improve or decrease
average historical performance?
SA Power Networks’ distribution network performance is currently measured based on the
achievement of output reliability targets for the frequency (USAIFI) and duration (USAIDI) of
supply interruptions. The output reliability targets specify the level of reliability service that
SA Power Networks is required to use its best endeavours to meet in each year.
To answer the threshold question as to whether customers require reliability service levels
to be maintained at average historical levels, improved or decreased, a series of customer
49
Business SA submitted that, ideally, the service standard framework should be flexible enough to
accommodate technical advances, like the development of “smart grids”, which could allow pricing based
on delivering different reliability for different customers or customer classes. Refer
http://www.escosa.sa.gov.au/library/130826-SAPowerNetworksServiceStandardFramework201520_IssuesPaperSubmission-BusinessSA.pdf.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
19
preference surveys have been conducted over the past ten years.50 Survey respondents
have reported consistently high levels of satisfaction with their current levels of electricity
supply reliability,51 across customer types (residential and business) and geographic
locations (with the exception of Kangaroo Island as outlined in section 2.6). The level of
general satisfaction is further supported by the low levels of complaints received by
SA Power Networks.52
The AEMC has proposed an economic assessment process to inform the setting of reliability
targets. Under this process, a number of cost-value scenarios would be developed, with the
expectation that the most economic scenario was selected. This process involves explicitly
assessing the cost of providing specific types of service against the value customers place on
the service.53 In practical terms, SA Power Networks would determine the cost of a number
of different levels of service (the scenarios) for service levels above and below a base level,
and test these through some form of ‘willingness to pay’ measure designed to identify the
value to customers.
Conceptually, when a customer experiences a supply interruption, there is an amount of
money that the customer would be willing to pay to have avoided that interruption. This
amount is referred to as the value of customer reliability (VCR). VCR is typically estimated
based on customer surveys attempting to quantify tangible costs, intangible costs and
opportunity costs for different types of customers (e.g. lost production, scrapped product,
spoiled food, overtime pay and lost production/sales). A key aim from incorporating an
economic value through approaches such as VCR is to seek to avoid customers paying for a
level of service they do not want. The Productivity Commission’s review noted that the
estimated VCRs in Australia are generally high by international standards and higher than
results from willingness to pay studies.54
50
51
52
53
54
20
Customer surveys were conducted by the Commission in 2003 and 2007. The 2013 customer survey
formed part of SA Power Networks broader customer engagement program. Refer
http://www.escosa.sa.gov.au/library/030916-PublicConsumerSurvey-KPMG.pdf; Refer
http://www.escosa.sa.gov.au/library/071130-ConsumerPreferenceElectricityServiceStandardsMcGregorTanResearch.pdf; and Refer http://talkingpower.com.au/wordpress/wp-content/uploads/SAPNConsumer-Survey-Report-1.0.pdf.
When asked “Overall how satisfied are you with your current electricity supply reliability?” the majority of
residential and small business customers responded as either “very satisfied” or “quite satisfied”: 85 per
cent in 2003, 84 per cent in 2007 and 88 per cent in 2013. Questions tracking customers’ overall
satisfaction with their current electricity supply reliability has been asked in each survey. The surveys have
included questions requesting further information from customers expressing dissatisfaction with their
reliability. However, the small percentages of dissatisfied customers allows for limited analysis, due to
concerns about the statistical significance of the responses.
By way of comparison, SA Power Networks received 0.1 complaints per 100 customers in 2011/12, which is
considerably lower than that received by electricity retailers (on average 2.7 per 100 customers). Refer
http://www.escosa.sa.gov.au/library/121129-APR_2012-AnnualPerformanceReport_2011-12Package.pdf.
Refer Australian Energy Market Commission, Review of the National Framework for Distribution Reliability,
Final Report, September 2013; available at: http://www.aemc.gov.au/market-reviews/completed/reviewof-the-national-framework-for-distribution-reliability.html.
For further discussion on the issues identified with the current VCRs utilised in Australia, refer Productivity
Commission Final Report, pp. 537-538.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
2.3.1
Summary of submissions
On the issue of utilising VCR to determine customer preferences for reliability levels, SACOSS
noted that customer survey results in Australia and the US consistently indicate that
residential VCR is lower than business VCR and that low-income households tend to express
lower VCRs than higher income households. It was SACOSS’ view that, in general terms, the
interests of residential consumers should be interpreted as:

households should only pay for the reliability they want; and

households should get the reliability they pay for.
It concluded that the implications of this are a preference for expenditure on reliability to
focus on bringing everyone up to the average rather than on raising the average standards.
SA Power Networks submitted that reliability targets for South Australia should be based on
current consumer preferences, as revealed in its recent consumer survey,55 leading it to
strongly advocate for reliability targets to be established based on historic performance.
2.3.2
Commission’s consideration
In considering the alternative methods before it, the Commission supports the
recommendations of both the Productivity Commission and the AEMC to incorporate
economic values into the service standard setting process in the future. However, the
Commission notes the current review being undertaken by the Australian Energy Market
Operator (AEMO) in this area.56 Updated VCRs could be used in future regulatory periods to
assist in determining the optimal level of service.
SA Power Networks’ stakeholder workshops57 identified that the program of potential
network and customer service improvements being proposed could be achieved within an
overall increase of no more than CPI; with the exception of further undergrounding of the
network which would be at significant extra cost to customers.
However, this same contextual framing was not provided to customers undertaking the
online survey. Asking customers what they would like is not a value-free exercise and some
contextual statements that an increase in service levels is likely to result in increased prices,
or alternatively, that lower standards may result in price reductions, is considered a
55
56
57
Refer http://talkingpower.com.au/wordpress/wp-content/uploads/SAPN-Consumer-Survey-Report-1.0.pdf.
Refer http://www.aemo.com.au/Consultations/National-Electricity-Market/Open/Value-of-CustomerReliability-Directions-Paper.
SA Power Networks engaged Deloitte to facilitate stakeholder workshops, with a total of seven workshops
conducted in April 2013. Three workshops were held in metropolitan Adelaide, with each dedicated to a
particular customer segment, covering residential and business consumers, plus Government, council,
welfare and special interest group representatives. Four workshop were held in regional areas (the
Riverland (Barmera), Mt. Gambier, Pt. Lincoln and Pt. Augusta) with each workshop containing a
representative mix of customer segments at each. The presentation used to guide SA Power Networks’
stakeholder workshops is available at http://talkingpower.com.au/wordpress/wp-content/uploads/SAPower-Networks-Workshop_slides-FINAL.pdf and a high level overview report of the outcomes and insights
from the workshops is available http://talkingpower.com.au/wordpress/wp-content/uploads/SAPNCustomer-Workshop-External-Report-3.2-FINAL.pdf.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
21
necessary minimum for such an exercise. As such, while there is some comfort in the
findings relating to overall customer satisfaction with existing reliability levels 58 - noting the
continuation of the general satisfaction trend over the three customer surveys - the
customer survey is of limited use for determining customers’ willingness to pay for reliability
improvements (or to accept decrements in reliability for reduced bills) as it did not include a
value proposition or require customers to trade-off service levels and prices.59
In the absence of an appropriate VCR, and supported by consistently high customer
satisfaction levels through multiple customers surveys, reliability targets will be set based on
SA Power Networks’ average historical performance.
Noting that the AER’s STPIS uses the most recent five years of performance data—on the
basis that this represents recent investment decisions—the most recent five years of
reliability performance data will be used to set the reliability targets for the 2015-2020
regulatory period.
Consistent with the Commission’s current network reliability targets for the 2010-2015
regulatory period, the targets for the 2015-2020 regulatory period will be set prior to the
commencement of the regulatory period and apply for the entire five year regulatory period.
Further assessment and realignment of reliability targets will occur when developing the
service standards for future regulatory periods.
Final Decision
The Commission’s final decision is to continue to require SA Power Networks to
provide network reliability in line with average historical performance, based on the
continued high levels of general satisfaction with existing reliability levels
demonstrated through multiple customer surveys. The Commission will use the most
recent five years of reliability performance data (i.e. 2009/10 to 2013/1460) to reflect
the impacts of recent investment decisions by SA Power Networks.
58
59
60
22
A review of the customer engagement approaches used by regulators and regulated businesses in Australia
and overseas by Cambridge Economic Policy Associates for the Independent Pricing and Regulatory Tribunal
suggests that some comfort can be drawn from multiple surveys producing consistent results that existing
levels of service are consistent with consumer preferences, with latter surveys being used to confirm the
results of earlier surveys. Refer
http://www.ipart.nsw.gov.au/Home/Industries/Research/Reviews/Customer_Engagement/Customer_Enga
gement_on_Prices_for_Monopoly_Services_2011/01_Jul_2011__CEPA_Discussion_Paper/Consultant_Report_-_CEPA__Regulated_Monopoly_Service_Providers_and_Customer_Views_Preferences_and_willingness_to_Pay__A_report_for_IPART_-_June_2011, p. 38.
The Commission understands that subsequent stages of SA Power Networks customer engagement process
will attempt to assess customers’ willingness to pay for various proposals; albeit in a limited manner. For
example, SA Power Networks Direction and Priorities document is expected to be released in April 2014.
While this will be too late for the Commission to take into consideration, it may assist the AER in assessing
SA Power Networks’ revenue proposal.
The Commission will receive this data from SA Power Networks in August 2014.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
2.4
Reliability targets: statistical exclusion of Major Event
Days from reliability targets
The current USAIDI and USAIFI targets include all sustained interruptions, regardless of
underlying cause. In addition to planned interruptions, common causes of sustained
interruptions include weather, equipment failure or the actions of third parties.
The impact of weather has consistently been a major contributor to SA Power Networks
reliability performance. While SA Power Networks’ distribution network must be built to
perform consistently within normal weather conditions, distribution networks are not
designed to withstand severe weather such as floods, bushfires or strong winds. As it would
be very difficult (and, in any event, prohibitively expensive), to design an electricity
distribution network to withstand all severe weather events, reliability measurements and
improvement efforts should focus on performance during the normal course of events and
efficient restoration practices when the network is under unusual stress.
It is important to be able to consistently identify and analyse the impact of abnormal
weather conditions as opposed to the impact of more mild weather on underlying reliability
performance. In addition to reporting on its performance against the USAIDI and USAIFI
targets, SA Power Networks is currently required to report separately on each “severe
weather event” that occurs during the year, on a regional basis. 61
The IEEE has developed an “exclusion” methodology to systematically remove “statistical
outliers” from reliability performance data to give a picture of underlying network
performance. The “excluded” events are termed Major Event Days (MEDs), the majority of
which result from severe or abnormal weather events (although other factors can result in
MEDs). Its purpose is to allow major events to be studied separately from daily operations,
and in the process, to better reveal trends in daily operation that would be hidden by the
large statistical effect of major events.62
2.4.1
Summary of submissions
SA Power Networks submitted that the main cause of the variations in its reliability
performance is the number and severity of severe weather events, with the impact of a
single severe weather event varying from a USAIDI contribution of between 5 minutes to
50 minutes. It submitted that were 30 days over the eight-year period where the daily
USAIDI exceeded 5.3 minutes. Of those 30 days, 28 coincided with the Bureau of
Meteorology (BOM) reporting “significant weather” on that same day. Of the remaining two
days, one immediately followed a day where the USAIDI exceeded 5.3 minutes and BOM
reported significant weather and the other resulted from vandalism (theft of copper) from
the Elizabeth Downs zone substation. It concluded that all 30 days would therefore be
considered beyond its reasonable control, in terms of mitigating the impact of the outages
on customers.
61
62
Electricity Industry Guideline No. 1 defines a “severe weather event” as a weather event where the
contribution to regional USAIDI was greater than three minutes or three per cent of the regional USAIDI
target. Refer http://www.escosa.sa.gov.au/electricity-overview/codes-guidelines/guidelines.aspx.
Refer clause 3.5 of IEEE standard 1366-2012.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
23
SACOSS supported continuation of a best endeavours approach to assessment of
performance against the service standards and targets, rather than excluding severe
weather events from reported results; however, it made no further submissions on this issue
in responding to the Draft Decision.
2.4.2
Commission’s consideration
The Commission notes that, in undertaking its annual assessment of SA Power Networks’
performance against the service standards and targets, it already separately considers the
impact of severe weather events on underlying reliability performance and “normalises” the
reliability data. Where, after excluding the impact of severe weather events, SA Power
Networks would have met the reliability targets, the Commission has generally been
satisfied that SA Power Networks has used its best endeavours in attempting to meet the
targets.
The Commission will adopt the exclusion methodology developed by the IEEE and adopted
by the AER for the STPIS to remove “statistical outliers” from SA Power Networks’
performance data to provide a more accurate trend of the underlying performance of its
network. This will allow the Commission to ensure that SA Power Networks excludes the
impact of MEDs in a robust and consistent manner.
SA Power Networks will be required to report separately on its performance during days
excluded under the MED methodology, with a particular focus on efficient restoration
practices during MEDs (refer 5.2).
This approach is consistent with the AER’s STPIS and the AEMC’s proposed national
framework to utilise “normalised” USAIDI and USAIFI performance data for the purposes of
setting targets.
Final Decision
The Commission’s final decision is to set normalised USAIDI and USAIFI reliability
targets to exclude the impact of Major Event Days to allow for more transparent
monitoring of trends in underlying network performance.
2.5
Standard of endeavour – “best endeavours”
SA Power Networks’ current reliability service standards and targets are of a best
endeavours nature. The term “best endeavours” is defined in the Electricity Distribution
Code as “to act in good faith and use all reasonable efforts, skill and resources”.
Although a “best endeavours” obligation is not as onerous as an absolute obligation (like
“must” or “shall”), the test to be applied in determining whether a party has satisfied its
obligation is that of what is prudent and reasonable in the circumstances. Best endeavours
are something less than the efforts which go beyond the bounds of reason, but are
considerably more than casual and intermittent activities. A party must at least be doing all
that a reasonable person could reasonably do in the circumstances. An obligation to use
24
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
best endeavours means a party is required to act honestly, reasonably and make a positive
effort to perform the relevant obligation.
The effect of having a “best endeavours” regime in place is that the relevant assessment of
performance is not merely a simple assessment of whether or not a given target was met,
with adverse consequences if it was not. The Commission adopts a two-fold test in assessing
performance against the best endeavours standards:
1. First, has the target been met?
2. If not, did the relevant licensee nevertheless use its best endeavours in its attempts to
meet the target?
Where targets are not met, SA Power Networks is required to advise the Commission why
the target was not met, what action it took at the relevant time in an attempt to ensure the
target was met, the nature of any preparations undertaken prior to the event(s)
(e.g. internal procedures and protocols set for handling such instances, the level of planning
and the ability to call on additional resources when required) and any subsequent
improvements implemented. In short, SA Power Networks must provide sufficient
information to enable the Commission to form a view as to whether or not best endeavours
were employed in those circumstances.
It is only in cases where both elements of this test are not satisfied that SA Power Networks
will be found to have failed to meet the standard. That is, SA Power Networks may fail to
meet a target but, provided it used its best endeavours in attempting to meet that target, it
would still satisfy the standard. A test of this sort allows for a more discretionary
assessment of performance, focussing on customer service delivery in a wide range of
circumstances. Such a test can also better protect consumer interests, on the basis that it
permits detailed assessment of particular circumstances or events on their merits and to
report those events publicly. It can also drive process improvements for regulated
businesses.
The Commission’s annual assessments of SA Power Networks reliability performance
currently include a subjective “best endeavours” test. The best endeavours assessments
focus largely on:

whether SA Power Networks’ performance would have been in line with longer-term
average performance, if the impact of severe weather events were removed; and

SA Power Networks’ performance during individual severe weather events.
As noted above, the number and impact of severe weather events can vary greatly within a
reporting period. The introduction of the IEEE MED exclusion methodology (refer 2.4) will
largely replace the current subjective test of best endeavours and limit the extent to which
the impacts of severe weather can be used as justification for not meeting reliability targets.
In a departure from the Commission’s current approach, both the AER’s STPIS and the
AEMC’s proposed national framework do not require DNSPs to meet the reliability targets in
each year of the regulatory control period. In the absence of a measurable “service
standard”, SA Power Networks would be free to deviate from its reliability targets in any
given year but would be subject to incentive payments under the STPIS arrangements and
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
25
would be obliged to report on reasons for the departure from its targets in its Distribution
Annual Planning Report produced for the AER. 63 Further, while the AEMC’s proposed
national framework allows for such reporting to include plans on how DNSPs expect to meet
any additional jurisdictional reliability measures, such as requirements for areas of high
economic importance or worst served customers, the detailed implementation of this
approach is not yet available for further consideration. 64
While the Commission will set the reliability service standards and targets on a consistent
basis with the AER’s STPIS, it is not prepared to rely solely on STPIS incentives to compel
SA Power Networks to use its best endeavours to meet the jurisdictional reliability service
standards and targets (refer section 2.3). However, the Commission notes that the
requirement for SA Power Networks to annually report on how it intends to meet (or
otherwise) the reliability service standards and targets under the AEMC’s proposed national
framework is broadly consistent with the Commission’s current assessment of a “best
endeavours” type obligation.
Accordingly, the Commission will continue to require SA Power Networks to demonstrate
that it has used its best endeavours to meet the reliability service standards and targets in
each year of the 2015-2020 regulatory period. While the AER will continue to report on SA
Power Networks’ performance against the STPIS, the Commission will continue to monitor
and publicly report on its assessment of SA Power Networks’ exercise of “best endeavours”
in each year of the regulatory period.
Final Decision
The Commission’s final decision is to require SA Power Networks to demonstrate that
it has used its best endeavours to meet the reliability service standards and targets in
each year of the 2015-2020 regulatory period.
2.6
Kangaroo Island
Kangaroo Island was treated as a “special case” in the Commission’s review for the 20102015 regulatory period, with only a separate USAIDI target set, on the basis that the
particular characteristics of this area and the historical performance experienced by
customers justified special treatment.
The historical data on reliability performance of the Kangaroo Island distribution network
indicated that there was a problem associated with reliability of electricity supply to the
Island. Average duration of outages were typically three to five times greater than on other
63
64
26
SA Power Networks produces each year a Distribution Annual Planning Report in accordance with the
requirements of rule 5.13.2 of the NER. The information contained within this report complies with the
requirements of Schedule 5.8 of the NER and describes: its network; planning procedures and policies; a
summary of network reliability for the previous financial year; forecast loads and emerging system
limitations; proposed solutions to those system limitations; and major construction activities that we have
completed or committed to in the last 12 months. Refer
http://www.sapowernetworks.com.au/centric/industry/our_network/annual_network_plans/distribution_
annual_planning_report.jsp.
Refer AEMC Final Report, p. 85.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
parts of the rural network in South Australia. The characteristics of the Kangaroo Island
network, and the environment in which it is located, also contributed to this problem.
During 2006, SA Power Networks installed back-up generation systems and associated
infrastructure on the Island to:

improve reliability performance on the Island; and

protect against the consequences of the failure of the undersea cable that supplies the
Island.
However, as the new standard only took effect from 1 January 2006 there was not sufficient
data to justify moving away from the previous USAIDI target, which was maintained for the
2010-2015 regulatory period.
Supply reliability on Kangaroo Island required further consideration. While still high, the
satisfaction level reported by customers on Kangaroo Island was lower than the state
average (63 per cent and 88 per cent respectively). Due to the very low number of
respondents to both the 2007 and 2013 customer surveys,65 some caution needs to be
exercised in relying upon the survey results alone. However, the potential issue with supply
reliability on Kangaroo Island was supported by further information in a written submission
from the Kangaroo Island Council and the Kangaroo Island Futures Authority (the Kangaroo
Island community).
2.6.1
Summary of submissions
The submission to the Issues Paper from the Kangaroo Island community sought tightening
of the reliability standards and targets for Kangaroo Island by applying the USAIDI and USAIFI
targets applicable to the neighbouring Eastern Hills and Fleurieu region for the 2015-2020
regulatory period.
The submission from the Kangaroo Island community on the Draft Decision noted that while
originally seeking retention of region-based targets based on recent actual performance, in
its view, the use of feeder types was likely to deliver the outcomes sought for the Kangaroo
Island community. SA Power Networks also accepted that the transition to feeder-based
reliability targets meant there was no longer a need for a separate target for Kangaroo
Island.
2.6.2
Commission’s consideration
Separate geographically-based service standards and targets will not be set for Kangaroo
Island. Consistent with the approach for the rest of the State, the reliability service
standards and targets for the network feeders located on Kangaroo Island will be included in
the broader feeder category targets, depending on the relevant feeder category for each
individual feeder (i.e. urban, rural short or rural long). Using the most recent five years of
reliability data will reflect the improvements in SA Power Networks’ reliability performance
on Kangaroo Island.
65
There were only 5 respondents in 2007 and 8 respondents in 2013.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
27
The level of reliability experienced by customers on Kangaroo Island will be monitored
through the Commission’s regional and low reliability feeder reporting (refer Chapter 5).
Final Decision
The Commission’s final decision is to not set separate normalised USAIDI and USAIFI
reliability targets for Kangaroo Island. Rather, individual feeders on Kangaroo Island
will be included within the broader feeder category targets set for the rest of the
State.
2.7
Quality of supply requirements
The quality of supply standards for voltage, voltage fluctuations and related factors
applicable to SA Power Networks are governed by various Australian Standards. Clause 1.1.5
of the Electricity Distribution Code currently reflects the requirement for SA Power Networks
to design, install, operate and maintain its network in accordance with applicable Australian
Standards.
SA Power Networks did not propose any changes to this requirement. However, it
submitted that the Electricity Distribution Code requirement duplicated a statutory
requirement to comply with the Australian Standards.66
The quality of supply requirements will be removed from the Electricity Distribution Code.
However, customer complaints regarding voltage variations will be captured through the
AER’s monitoring of SA Power Networks’ complaints performance.67
Final Decision
The Commission’s final decision is to remove clause 1.1.5 from the Electricity
Distribution Code (EDC/10) on the basis that the obligations mirror the requirements
set out in regulation 46 of the Electricity (General) Regulations 2012.
66
67
28
Refer Regulation 46 of the Electricity (General) Regulations 2012.
The regulatory relationship between a DNSP and its customers is primarily governed under the NERL. Prior
to the commencement of the NECF in South Australia on 1 February 2013, the Commission required
SA Power Networks to have complaint handling and dispute resolution procedures in place that first
included escalation within SA Power Networks and then to an external, independent and free dispute
resolution body; the Energy and Water Ombudsman SA. The requirement for DNSPs to have standard
complaints and dispute resolution procedures now arises under Part 4 of the NERL, administered by the
AER.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
3.
CUSTOMER SERVICE STANDARDS AND TARGETS
SA Power Networks will be required to maintain the current jurisdictional telephone and
written enquiries responsiveness customer service standards and targets for the 2015-2020
regulatory period.
3.1
Telephone and written responsiveness service standards
and targets
SA Power Networks relies on notifications from its customers to identify and isolate the
location of supply interruptions. The current customer service standards and targets
concern responsiveness by SA Power Networks to telephone and written enquiries from
customers, as set out in Table 3.1.
Table 3.1: SA Power Networks’ customer service standards and targets
CUSTOMER SERVICE AREA
Telephone responsiveness
Written responsiveness
(including email correspondence)
STANDARD OF
ENDEAVOUR
Best endeavours
to achieve
target in each
year
TARGET
85% of telephone calls answered
within 30 seconds
95% of written enquiries responded
to within 5 business days
The Electricity Distribution Code requires SA Power Networks to use its best endeavours to
achieve the customer service standards and targets during each year.68 As average
standards, SA Power Networks is required to meet the targets over the course of a year,
rather than necessarily for a shorter period (e.g. during a single MED). However, the
demonstration of satisfaction of best endeavours requires that SA Power Networks has
taken reasonable steps to ensure that telephone calls will be answered during MEDs
(e.g. through the use of temporary “over-flow” call centres).
While oversight of equivalent customer service standards for NERL retailers was transferred
to the AER with the commencement of the NECF, responsibility for administering SA Power
Networks’ customer service standards and targets remains a jurisdictional requirement, to
be set by the Commission. The AER’s STPIS includes a customer service element, which, like
the reliability targets, provides financial incentives for SA Power Networks to maintain (or
improve, where customers value such improvements) the current customer service levels.
3.1.1
Summary of submissions
SA Power Networks submitted that the current service standards and targets should remain
unchanged for the 2015-2020 regulatory period. SA Power Networks noted that its
68
Refer clause 1.1.2 of the Electricity Distribution Code.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
29
stakeholder engagement program identified the growing importance of access to various
communications channels and customers’ stated preferences for utilising different channels
for different purposes in the future.
Respondents indicated a preference for using a combination of channels to communicate
and interact with SA Power Networks to complete a variety of actions. 69 The call centre was
the most preferred communication channel to report supply interruptions,70 while online
“self-service” access was preferred for obtaining information about current supply
interruptions.71
3.1.2
Commission’s consideration
As customers become more reliant on other communications channels to report supply
interruptions, the current focus on telephone responsiveness may need to be revisited.
While alternative communications channels are expected to grow in importance in the
future, the majority of customers utilise SA Power Networks’ call centre to report supply
interruptions.72 Further, there has been nothing to suggest to the Commission that there
are any widespread or systemic issues with SA Power Networks’ customer service that would
require a tightening of current obligations or an increase in the current targets. Accordingly,
the Commission will maintain the current customer service standards and targets for the
2015-2020 regulatory period.
Final Decision
The Commission’s final decision is to require SA Power Networks to continue to use
its best endeavours to meet the following customer service responsiveness targets:
69
70
71
72
30

85% of telephone calls answered within 30 seconds; and

95% of written enquiries responded to within 5 business days.
Refer http://talkingpower.com.au/wordpress/wp-content/uploads/SAPN-Consumer-Survey-Report-1.0.pdf.
44 per cent of respondents preferred to use the call centre; 36 per cent preferred to use a mobile/smart
phone; 30 per cent preferred to use SA Power Networks website.
49 per cent of respondents preferred to use SA Power Networks website; 37 per cent preferred to use a
mobile/smart phone with only 24 per cent preferring to use the call centre.
When asked about the methods of communication used to contact SA Power Networks in the past two
years, 70 per cent of respondents contacted SA Power Networks’ call centre. 68 per cent of respondents
were either “very satisfied” or “somewhat satisfied” with their interactions with SA Power Networks’ call
centre.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
4.
GSL SCHEME
The average network reliability and customer service standards and the AER STPIS are based
on SA Power Networks’ performance as experienced by groups of customers
(e.g. performance averaged across customers connected to CBD, Urban, Rural Short or Rural
Long feeders). In contrast, the GSL Scheme relates directly to the service experienced by
individual customers.73
SA Power Networks will be required to continue to make GSL payments to customers
experiencing service below the current pre-determined thresholds. The Commission will
introduce a new long duration supply interruption GSL payment of $605 for single
interruptions in excess of 48 hours. To maintain the value of the original GSL payments, the
GSL payment amounts for the 2015-2020 regulatory period will be increased to reflect
movements in CPI from June 2005 to December 2013, rounded to the nearest $5.00.
4.1
Nature of the GSL Scheme
Ultimately, it may be uneconomic to ensure all customers receive average service level
targets. The GSL Scheme is designed to make payments to customers where it is too costly
to provide the average service standards to an individual customer.
The principles underpinning the GSL Scheme are:

customers value that aspect of the service;

the GSL target is a reasonable measure of the customer’s expectation;

the GSL payment is made to customers receiving a level of service below a
predetermined level; and

the reason for failure to meet the GSL is within SA Power Networks’ control.
GSL payments are automatically 74 made to customers who receive service that does not
meet threshold levels in the following service areas:

timeliness of appointments, connections of a new supply address and repair of faulty
street lights; and

frequency and duration of supply interruptions.
GSL payments are available to all customers that experience reliability worse than the
predetermined levels, regardless of the type of customer (residential or business) and
73
74
Clause 1.1.4 of the Commission’s Electricity Distribution Code establishes the requirements for the current
GSL scheme.
GSL payments are automatically credited to a customer’s bill. Duration of interruption GSL payments are
made to the affected customer within three months of the event occurring. Frequency of interruption GSL
payments are made to the affected customers in the quarter following the completion of the regulatory
year (ending 30 June). The GSL scheme excludes interruptions caused by transmission and generation
failures; disconnection required in an emergency situation (e.g. bushfire); single customer faults caused by
that customer; interruptions of less than one minute; and planned interruptions.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
31
regardless of their location on the distribution network (with the exception of streetlight
repair timeframes). While SA Power Networks’ reliability targets exclude performance
during severe or abnormal weather events that qualify under the MED methodology
(discussed in 2.4 above), GSL payments are made to customers that experience interruptions
during MED excluded events.
SA Power Networks sought feedback on elements of the GSL Scheme as part of its consumer
engagement program.75 The majority of participants (81 per cent, n=51) agreed that GSL
payments should be made to customers experiencing interruptions longer than 12 hours.
The majority of participants (68 per cent, n=42) also agreed that the payment amount
should be the same regardless of the customers’ location. Just over half of participants
(56 per cent, n=35) agreed that GSL payments should be made irrespective of the cause of
the interruption.
4.1.1
Summary of submissions
SA Power Networks agreed that GSL payments are made in recognition that a predetermined service level has not been achieved and that it would be costly for SA Power
Networks to be funded to undertake the capital works to achieve the service level 100 per
cent of the time in all circumstances. SA Power Networks expressed concern with the
Commission’s reference to the position put by the AEMC that GSL payments should not be a
recoverable cost item.76
SACOSS submitted that the GSL Scheme needs to provide SA Power Networks with
appropriate incentives to provide a reliable supply of electricity, without becoming a
mechanism used to delay the implementation of more permanent solutions.
4.1.2
Commission’s consideration
Submissions on the Draft Decision highlight the need to clarify the nature of the GSL
Scheme.
While GSL payments are directed at individual customers, by their nature, they provide a
financial incentive for SA Power Networks to assess the trade-off between making the GSL
payments and undertaking capital and/or operational expenditure to address any causes of
75
76
32
Consumers who attended SA Power Networks’ Stage 1 workshops were invited to attend one of the Stage 2
workshops. Stage 2 workshops were held during October and November 2013 with electricity customers
and stakeholders from across the state. Three workshops were held in the CBD and five regional workshops
held on Kangaroo Island, Berri, Mt Gambier, Pt Augusta and Pt Lincoln. Residential, business, government,
council and other special interest groups were represented in the workshops. A report providing a high
level overview of the outcomes and insights from the eight workshops is available at
http://talkingpower.com.au/wordpress/wp-content/uploads/SAPN-Stage-2-Consumer-WorkshopReport_Dec-2013.pdf.
The Commission’s Draft Decision noted that the AEMC’s proposed national framework suggested that: (1)
the impact of a GSL scheme on improving reliability performance is only ever likely to be significant when
the size of the payments is sufficient to incentivise the DNSP to invest in the network; and (2) in order to
create the proper incentive, DNSPs should not be able to recover the cost of the GSL payments in their
current or future revenue allowances. Refer http://www.aemc.gov.au/market-reviews/completed/reviewof-the-national-framework-for-distribution-reliability.html.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
poor performance thereby avoiding the need to make the GSL payments, which will have a
direct impact on profits.
In principle, therefore, a certain level of GSL payments should be allowed for in SA Power
Networks’ costs (and recovered from all customers), as recognition of the uneconomic
expenditure required to increase service levels for certain customers who may never receive
the average service levels (i.e. customers located at the edges of the distribution network
and connected to long radial feeders in remote areas). However, for GSL payments to
provide the incentives to SA Power Networks to assess the trade-off between making
payments and addressing underlying performance issues, a certain level of payments should
not be funded, as there should be a “penalty” for service that is within SA Power Networks’
control to manage. Ultimately, GSL payments need to provide SA Power Networks with the
incentive to assess the relative costs of making the payments versus making the investments
in the infrastructure to improve poor service (where economic to do so).
Ultimately, however, the decision on the funding arrangements for the GSL Scheme will be
considered as part of the AER’s assessment of SA Power Networks’ regulatory proposal.77
4.2
Commission’s GSL Scheme vs. AER’s STPIS
While the main financial incentives for SA Power Networks will be provided by the AER’s
STPIS, the Commission will continue to determine the GSL Scheme applying to SA Power
Networks for the 2015-2020 regulatory period, rather than using the GSL component of the
STPIS.78
The current GSL Scheme provides better outcomes for South Australian customers
experiencing poor service than the scheme contained in the STPIS as, under the
Commission’s GSL Scheme:

GSLs are paid for service interruptions, regardless of whether the interruption events
are part of MEDs that are excluded average reliability performance (such events are
excluded under the STPIS);

duration interruption payments are more granular and better able to target longduration interruptions, including those in excess of 24 hours (the STPIS only provides
payments for any and all interruptions of 12 hours for CBD and Urban feeders and any
and all interruptions of 18 hours for Rural Short and Rural Long feeders); and

the streetlight repair GSLs were introduced as a cost-effective alternative to SA Power
Networks conducting street light patrols and individual customers can report streetlight
outages identified anywhere within the State (GSLs are payable only to customers
adjacent to faulty streetlights under the STPIS).
77
78
The Commission has no role in the funding arrangements for SA Power Networks. However, the GSL
measures and payment amounts set by the Commission influence the total cost of the scheme.
While all NEM jurisdictions currently have some form of GSL scheme, and the AER’s STPIS provides a GSL
scheme where a jurisdiction does not establish one, no jurisdiction has currently adopted the AER's scheme.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
33
4.2.1
Summary of submissions
There was general support for the continuation of the current GSL Scheme. Business SA was
supportive of retention of the current GSL scheme, noting that it appears appropriate and
should provide adequate compensation to those customers significantly and adversely
impacted by supply interruptions or poor customer service. SA Power Networks advocated
for the retention of the current GSL scheme on the basis that it provides the appropriate
incentives to restore (as soon as practical) those interruptions that occur on MEDs or during
events which include MEDs. SA Power Networks further submitted that the current GSL
scheme provides significantly stronger incentives for customers to report streetlight outages
and thus for the repair of streetlight faults, with the AER’s scheme limiting street light GSL
payments to customers adjacent to streetlights.
In response to the Commission’s suggestion that amendments to the GSL Scheme would be
considered if further progress was made at the national level, SACOSS submitted that further
work should occur to integrate the GSL Scheme into the AER’s STPIS for the 2015-2020
regulatory period.
4.2.2
Commission’s consideration
As there have been no further national developments in this area, no submissions
recommended that the current GSL component of the STPIS should be adopted and there
was general support for the continuation of the Commission’s current GSL Scheme, the
Commission will determine the GSL Scheme to apply to SA Power Networks for the 20152020 regulatory period.
Final Decision
The Commission will continue to determine the GSL Scheme applying to SA Power
Networks for the 2015-2020 regulatory period.
4.3
Supply interruptions greater than 48 hours
Over the first three years of the current regulatory period, an average of 20 per cent of all
duration GSLs were paid to customers experiencing supply interruptions greater than
24 hours. As reliability targets will now exclude the impact of MEDs, it is important to
ensure that there is sufficient incentive for SA Power Networks to focus on restoring supply
interruptions where the MED exclusion threshold has been exceeded.
The Commission will introduce a new long duration supply interruption GSL payment of
$605 for single interruptions in excess of 48 hours.
4.3.1
Summary of submissions
Business SA and SACOSS supported the introduction of the new long duration GSL payment.
While not opposing the introduction of the new long duration GSL payment, SA Power
Networks’ submission on the Draft Decision noted that the quantum of the proposed
48 hour threshold payment would exceed the total network charge for the average
34
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
residential customer, citing an amount of $685 per annum (excluding Transmission and
Photovoltaic Feed-in Tariff costs).
4.3.2
Commission’s consideration
The existing GSL payment for interruptions greater than 24 hours was introduced following
the inquiry into SA Power Networks’ performance during the 2006 heatwave.79 The
payment amount was set to provide affected customers with an additional $160 on top of
the existing $160 payment for interruptions of 18 hours or more (for a total payment of
$320). The purpose of the greater than 24 hours GSL payment was to provide an additional
financial incentive for SA Power Networks to ensure that the restoration times of the
2006 heatwave were not repeated; whether in future severe weather events or in general
restoration practices. SA Power Networks also amended its Maximum Restoration Time
Policy to prioritise the restoration of customers and ensure reconnection occurred within an
acceptable time. This amount was then adjusted to reflect changes in CPI for the 2010-2015
regulatory period (currently set at $370).80
For consistency with the approach used to determine the greater than 24 hour GSL payment,
the Draft Decision proposed to simply double the greater than 24 hour GSL payment
amount. The Commission acknowledges SA Power Networks’ concern that doubling the
24 hour GSL payment would result in a payment in excess of the distribution component of
the average customer bill. Accordingly, consideration has been given to the following
matters in determining the final amount for the new long duration GSL payment:

it is an acknowledgement that interruptions in excess of 48 hours are (and should be)
extraordinary events that are well outside the average level of service experienced by
most customers;

it is made in recognition of the inconvenience caused to customers, rather than
attempting to reflect the full (and different) costs incurred by individual customers in
response to a long interruption;81 and

it should not exceed the average amount paid for the network component of an
electricity bill (noting that increased GSL payments will impact on the overall network
charges paid by all customers).
The new long duration supply interruption GSL payment will be set at $605; comprised of
the greater than 24 hour GSL payment ($405) and the up to 24 hour GSL payment ($200).
This amount acknowledges the additional inconvenience of being without electricity for
more than a day, without exceeding the distribution component of an average bill. Due to
the low numbers of customers expected to experience interruptions exceeding 48 hours, the
overall impact of the new long duration GSL payment is expected to be minimal. For
79
80
81
Refer http://www.escosa.sa.gov.au/projects/60/heatwave-reporting-summer-reliability.aspx.
Refer http://www.escosa.sa.gov.au/projects/120/amendments-to-electricity-distribution-code-january2006-heatwave-inquiry.aspx#.
A separate customer compensation scheme exists for damage or losses resulting from an incident
associated with SA Power Networks’ electricity distribution network. Refer
http://www.sapowernetworks.com.au/centric/customers/power_interruptions_current/claims_for_power
_variations_and_interruptions.jsp.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
35
example, as noted in the Draft Decision, while the actual GSLs payable will vary each year, if
the 48 hour GSL payment currently existed, the total GSL payments made by SA Power
Networks would have been approximately three per cent higher during the first three years
of the current regulatory period.
Final Decision
The Commission’s final decision is to introduce a new long duration supply interruption
GSL payment of $605 for single interruptions in excess of 48 hours.
4.4
GSL Scheme categories and amounts for 2015-2020
To maintain the value of the original GSL payments set for the 2005-2010 regulatory period,
the GSL payment amounts for the 2015-2020 regulatory period have been increased to
reflect movements in CPI from June 2005 to December 2013,82 rounded to the nearest
$5.00. The GSL categories and payment amounts to apply for the 2015-2020 regulatory
period are set out in Table 4.1.
Table 4.1: GSL scheme categories and payment amounts
GSL category
Timeliness of appointments - no more than
15 minutes late
Regulatory Period
2005-2010 2010-2015
2015-2020
(GST Inc)
(GST Inc)
(GST Inc)
$20
$25
$25
$50 per day
to a
maximum
of $250
$60 per day
to a
maximum
of $300
$65 per day
to a
maximum
of $325
$20 per
5 business
day period
$25 per
5 business
day period
$25 per
5 business
day period
$20 per
10 business
day period
$25 per
10 business
day period
$25 per
10 business
day period
Frequency of supply >9 and ≤12 interruptions
$80
$90
$100
Frequency of supply >12 and ≤15 interruptions
$120
$140
$150
Promptness of new connections - within
6 business days
Timeliness of street light repairs – within
5 business days
(CBD, Metropolitan Adelaide, Whyalla, Mount
Gambier, Mount Barker, Gawler, Stirling, Murray
Bridge, Port Augusta, Willunga, Port Pirie and Port
Lincoln)
Timeliness of street light repairs – within
10 business days
(Country - all other areas)
82
36
Adjustment using change in Adelaide CPI - all groups from June Quarter 2005 to December Quarter 2013
(ABS Catalogue No. 6401.0).
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
GSL category
Regulatory Period
2005-2010 2010-2015
2015-2020
(GST Inc)
(GST Inc)
(GST Inc)
Frequency of supply >15 interruptions
$160
$185
$200
Duration of supply interruption >12 and ≤15
hours
$80
$90
$100
Duration of supply interruption >15 and ≤18
hours
$120
$140
$150
Duration of supply interruption >18 and ≤24
hours
$160
$185
$200
Duration of supply interruption >24h and ≤48
hours
$320
$370
$405
Duration of supply interruption >48 hours
n.a.
n.a.
$605
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
37
5.
PERFORMANCE MONITORING AND PUBLIC
REPORTING FRAMEWORK
Performance monitoring and reporting promotes transparency around SA Power Networks
performance against the service standards and targets. It is a useful tool for informing
customers about the level of service they are receiving (at an aggregate level) and identifying
reasons for any poor performance. It identifies baseline performance and provides
incentives for improvement where performance outcomes are poor. It also provides the
data required to develop service standards (or targets), assess compliance with such
standards and inform the decision making processes of regulatory agencies, regulated
businesses and the Government.
The performance monitoring and reporting framework will focus on four particular areas of
SA Power Networks’ performance:

reliability performance outcomes for customers in geographic regions against average
historical performance;

operational responsiveness and reliability performance during MEDs;

identification and management of individual feeders with ongoing low-reliability
performance; and

assessment of the number of GSL Scheme payments made in each geographic region.
5.1
Monitoring and reporting on average historical
performance on a regional basis
While consistency in the parameters of the jurisdictional service standards and the AER STPIS
is important, the shift to setting reliability service standards on the basis of network feeder
types is less meaningful for customers seeking to understand the levels of reliability they
receive, as customers are unlikely to know whether they are connected to an “urban”, “rural
short” or “rural long” feeder.83
SA Power Networks will be required to continue to report on reliability performance
outcomes in the seven current geographic regions (by measuring both unplanned
interruptions and unplanned interruptions with MEDs removed) against average historical
performance in that region and explain departures from longer term (e.g. five year) average
performance outcomes. This will also allow the Commission to monitor whether the shift to
feeder types results in any degradation of average historical performance at a regional level.
SA Power Networks agreed with this approach, submitting that regionally-based reliability
reporting should be required, so that customers are able to understand the level of reliability
the average customer receives in a particular geographical area. This approach also reflects
the concerns raised by Business SA, the Kangaroo Island community and SACOSS about
83
38
For example, some feeders within the Greater Adelaide Metropolitan Area fall within the “rural short”
feeder category.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
ensuring sufficient transparency in SA Power Networks’ performance in rural and regional
areas in initially seeking to retain the regionally-based reliability standards and targets.
Final Decision
The Commission’s final decision is to require SA Power Networks to report on USAIDI
and USAIFI performance on a regional basis.
5.2
Performance during Major Event Days
The removal of the impact of MEDs from the reliability service standards and targets
acknowledges that reliability measurements and improvement efforts should focus on
performance during the normal course of events to identify changes in the underlying
performance of SA Power Networks’ reliability over time.
However, the purpose of removing the impact of MEDs from the assessment of reliability
performance is to allow for major events to be studied separately from daily operations,
and, in the process, to better reveal trends in daily operations that would be hidden by the
statistical effect of major events.84 The USAIDI index is used as an indicator of operational
and network design stress.
The Commission will monitor and report on both:

USAIDI and USAIFI performance during excluded MEDs - to assess preparation for and
responsiveness to individual events, reflecting the sustained interruptions actually
experienced by customers; and

normalised USAIDI and USAIFI performance - to assess degradations in underlying
network reliability.
SA Power Networks will provide performance data for the seven existing geographic regions.
Those data will assist the Commission in determining whether additional GSL payments
should be introduced for performance during MEDs.
Final Decision
The Commission’s final decision is to require SA Power Networks to report on:

unadjusted USAIDI and USAIFI performance during qualifying excluded MEDs; and

normalised USAIDI and USAIFI performance as a result of applying the exclusion
methodology.
5.3
Low reliability feeders
Since 2010/11, the Commission has reported on the performance of low-reliability
distribution feeders. A low-reliability feeder is defined as an individual feeder with USAIDI
84
Refer clause 3.5 of IEEE standard 1366-2012.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
39
performance approximately twice as high as the USAIDI target for that feeder class for two
consecutive financial years.85
Low-reliability distribution feeders are generally located in rural and remote parts of the
network where restoration activities following a fault can often be influenced by difficult
terrain or long distances that need to be patrolled to locate the fault. Monitoring lowreliability feeders allows for identification of those customers not benefiting from (or
receiving performance consistent with) the average reliability standards and targets for an
extended period of time. There are currently no separate service standards or targets set for
low-reliability feeders.
SA Power Networks’ submitted that it continuously monitors individual feeder performance
and investigates any deviation from historical performance. Further, any individual
customer enquiries or complaints about reliability issues are investigated to determine if
action should be taken to remedy a decline in historical reliability performance at the
individual feeder level.
The low levels of complaints reported by SA Power Networks, including the complaints
escalated to the Energy and Water Ombudsman SA, appear to confirm the underlying levels
of customer satisfaction with this approach. Any deficiencies in SA Power Networks’
performance in this regard would be likely to result in an increased level of customer
complaints, putting additional pressure on SA Power Networks to address individual
customer concerns.
SA Power Networks will be required to continue to monitor and report on the areas of its
network with ongoing low-reliability at the individual feeder level, including the geographic
locations of each low-reliability feeder.
Final Decision
The Commission’s final decision is to continue its current low-reliability feeder
reporting requirements for SA Power Networks, requiring monitoring and reporting
at the individual feeder level, on:
85
40

USAIDI and USAIFI performance as at 30 June;

normalised USAIDI and USAIFI as at 30 June;

the geographic location of the feeder; and

action already undertaken and/or any planned future action to improve the
reliability of each identified feeder.
For discussion on the adoption of this methodology, refer http://www.escosa.sa.gov.au/library/100617ServiceStandards2010-2015-FinalDecision.pdf, pp. 14-20.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
5.4
Reporting on GSL payments
SA Power Networks currently reports on the total number of GSL payments made in each
category, which the Commission makes publicly available each year in the Annual
Performance Report.86
The submission from the Kangaroo Island community recommended that payments made
under the GSL Scheme should be reported on a regional basis, to allow for more transparent
monitoring of local reliability issues.
This supplementary reporting metric will be introduced for the 2015-2020 regulatory period,
to work with the regionally-based reporting on low-reliability feeders. Together, these data
will provide additional information on the segments of the network where the cost of
making GSL payments on an ongoing basis may suggest further investigation of longer-term
network solutions could be warranted.
Final Decision
The Commission’s final decision is to require SA Power Networks to report on GSL
payments made in each of the seven geographic regions.
86
Copies of the Annual Performance Reports and supporting data are available on the Commission’s website
at http://www.escosa.sa.gov.au/electricity-overview/reporting-and-compliance/annual-performancereports.aspx.
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
41
6.
NEXT STEPS
The final network reliability targets will be established once data for 2013/14 are available,
with final targets set in late 2014. Public consultation will occur on the consequential
amendments to relevant regulatory instruments.
42
SA Power Networks Jurisdictional Service Standards for the 2015-2020 Regulatory Period
Final Decision
The Essential Services Commission of South Australia
Level 1, 151 Pirie Street Adelaide SA 5000
GPO Box 2605 Adelaide SA 5001
08 8463 4444 | [email protected] | www.escosa.sa.gov.au