REQUEST FOR INFORMATION / REQUEST FOR PROPOSALS ElectraNet reference: Request for Information RFI 001/10 ETSA Utilities reference: Request for Proposals RFP 001/10 Projected Distribution Network Constraint: Bulk Electricity Supply to the Fleurieu Peninsula Evaluation Progress Report #1 ElectraNet – ETSA Utilities August 2010 COPYRIGHT © ElectraNet and ETSA Utilities – All Rights Reserved This document is protected by copyright jointly vested in ElectraNet and ETSA Utilities. No part of this document may be reproduced in any form without limitation unless prior written permission is obtained from both ElectraNet and ETSA Utilities. Background In March 2010 ETSA Utilities and ElectraNet published a joint RFI / RFP 001/10 “Projected Distribution Network Constraint: Bulk Electricity Supply to the Fleurieu Peninsula” which detailed impending constraints in the supply of electricity to the Fleurieu Peninsula. An extract from the executive summary follows. “ETSA Utilities has identified that the capacity of the electrical supply system to the Fleurieu Peninsula is nearing its limits and that major expenditure will soon be required to upgrade it to maintain both its reliability and the technical standards of supply such as voltage levels. As a consequence of the estimated project value being in excess of ten million dollars the project falls outside of the scope of ESCOSA’s Guideline 12 process, however both companies are still bound by the NER to consult with Registered Participants and Interested Parties regarding projected sub transmission network limitations and to issue a Request for Information paper to potential solution providers. The “Request for Information (RFI 001/10) / Request for Proposals (RFP001/10): Bulk Electricity Supply to the Fleurieu Peninsula Region” document outlines the consultation process being undertaken and details the projected network limitations applying to the existing Fleurieu Peninsula supply system. It seeks submissions from Registered Participants, Interested Parties and customers for possible solutions that can economically and reliably provide adequate future capacity in the Fleurieu Peninsula Region. A full copy of the document is available on ETSA Utilities web site at: http://www.etsautilities.com.au/public/download.jsp?id=11540 Responses Received Eight responses were received in response to the RFP, of these six had sufficient detail to move to the evaluation phase. Five of these six involved the installation of peak lopping generators in various locations and sizes. The sixth was for the installation of Dynamic VAr support at both Victor Harbor and Goolwa. A brief description of the six compliant proposals follows. American Superconductor This company proposed the installation of reactive voltage support at both Victor Harbor and Goolwa to increase the power transfer capability of existing and upgraded lines. Cummins This company proposed the installation of two diesel power stations (40 MW at 66kV and 10 MW at 11 kV ) to be located at Square Water Hole and Goolwa to reduce the load at risk during peak summer periods. These units will be large enough to provide some N-1 coverage during off peak periods. Energy Power Systems This company proposed the installation of one 66 kV power station (up to 30 MW) to be connected at Willunga and the possibility of one or more small 11kV power stations to be connected at Goolwa, Victor Harbor etc. to reduce the load at risk during the summer peak periods. Environmental Energy Australia This company proposed the installation of three diesel 66kV power stations to be located at Goolwa (2 x 18 MW), Victor Harbor (2 x 25 MW) and Willunga (2 x 25 MW) to off load the load at risk during the summer peak period. These units will be large enough to provide an N-1 service to Victor Harbor, Goolwa and Square Water Hole. Investec This company proposed the installation of a diesel 66kV power station (30 MW to 180 MW) on the Square Water Hole to Goolwa line to be located near Goolwa to offload the risk during the summer peak period. This unit will be large enough to provide an N-1 service to Goolwa and Square Water Hole and, with the addition of a second line, to Victor Harbor. Vibe Energy This company proposed the installation of a diesel 11kV power station ( 7 x 1.15 MVA) to be located at Goolwa to reduce the load at risk during peak summer periods. Progress to Date We have completed our initial technical analysis of the three network options that were described in the RFP: – Commission a new Connection Point in the Southern Fleurieu Peninsula in the Middleton, Goolwa, Currency Creek area in 2016; or – Commission a new Connection Point near Mt Compass also in 2016; or – Delay the commissioning of the Mt Compass Connection Point until 2024 by a combination of sub transmission enhancements and an upgrade of the existing Morphett Vale East Connection Point. The results of our analysis show that the three options are within the margin of error at our current level of cost estimates, consequently more refined estimates are being developed. We have also completed about 50% of our initial technical analysis of the six proposals above and have requested and received clarification from the proponents on a number of minor queries. The nature of a number of the proposals has raised some technical issues with regard to the Regulatory Test regime. ETSA Utilities and ElectraNet are seeking clarification of these issues to ensure compliance with regulations. We are also seeking confirmation from external specialists on certain system stability questions that have been raised during the initial analysis of the various options. Next Actions By year end ETSA Utilities and ElectraNet intend to complete their analysis of each of the proposals and compare them both technically and economically with the three traditional network solutions. This analysis will identify one or more preferred solutions within the margin of error of our improved cost projections. Where as a result of our analysis we believe that some of the proposers’ solutions can be improved through minor variations or by being combined with other providers or the network solutions we will inform the proposer and ask if they are willing for the modified solution to be used in place of the original. Where the final list of preferred solutions involve any of the proposals above we will request revised proposals with firm costs and assurances with regard to Environmental and other necessary approvals. All providers will be treated on an equal basis with the intention being to find the most effective solution (as defined by the AER Regulatory test) to the impending constraints. It is our intention to keep all proposers informed of progress on evaluating the responses to the RFI/RFP and will issue a second progress report in October 2010.