FMANZ gratefully acknowledges the support of our Gold Sponsors

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FMANZ gratefully acknowledges the support of our
Gold Sponsors
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NZ Electricity Market - Where to Next?

• Mike RoanWholesale Markets ManagerMeridian
  Energy

13 September 2012
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The information provided in this presentation is
provided for education and informational purposes
only. The information is not intended to be and
does not constitute financial advice. It is
general in nature and is not specific to you,
your business or anyone else. You should not make
any decision based on this information (financial
or otherwise) without undertaking independent due
diligence or seeking your own independent
financial or other professional advice.
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Recap Other Seminars

• At previous seminars we combined messages
• prices have risen by 5 per cent since 2000
• prices will continue to rise (and can be
  volatile)
• we can control the way we use electricity in
  order to manage cost
• we can also contract out of exposure to price
  volatility

Take Out Controlling electricity consumption
while contracting out of price volatility will
become increasingly valuable to you
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This Time

• This time
• what is going on in the electricity sector that
  might be of interest
• how may this impact you and decisions you make?

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NZ Wholesale Electricity Price Forecast

• MED electricity price forecasts remain the same
  prices are likely to rise

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Source MED Energy Outlook - www.med.govt.nz/secto
rs-industries/energy/energy-modelling/modelling/ne
w-zealands-energy-outlook
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Cross Winds

• However, there are some cross winds to be aware
  of
• the global economy is weak
• NZ electric demand is weak
• reasonable levels of supply (absent hydro
  shortage)

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Cross Winds NZ Electric Demand

• Since 2007, NZ electric demand has been
  reasonably static
• The drivers of flat demand are well documented

Static Demand
Source Meridian
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Cross Winds NZ Electric Demand

• Looking forward, much of the above uncertainty
  continues to exist
• ongoing global economic instability and more
  local impacts are expected to remain
• NZAS Norske Skog announcements are indicators
  of difficulty that is possibly widespread
• This graph includes 2,000GWh of new supply being
  added over the next three years

Forecast demand growth
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Offsets - Issues to be Aware of

• Offsetting all of the above is hydro fuel
  availability (inflow volatility)
• NZ electricity prices largely a function of hydro
  storage (unlike other countries)

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Source Meridian
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Recent Events NZEM

• NZ wholesale electricity prices reflect hydro
  storage capacity

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Source Meridian
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Offsets - Issues to be Aware of

• Some of our competitors will have big decisions
  to make
• Genesis has said it will shut two Huntly units
  one in 2012 and one in 2014
• Contact is considering repowering its Otahuhu
  station
• And there are some very specific challenges to
  overcome
• Transpower is completing a number of large
  transmission upgrades in the near term
• Genesis is relining the Tekapo canal
• NZAS request to renegotiate contractual terms
  (approx 12 of NZ demand)

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Source Meridian
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Major Projects and Timelines
Reinforce Auckland consumption - November 2012
Taupo Grid Strengthening - Late 2014
Lower NI Upgrading - 5 years away
1000MW HVDC Upgrade - February 2013
Tekapo Canal Relining - Jan through April 2013
Lower SI Renewable Upgrade - Stage 1 November
2012 - Stage 2 March 2014
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• My role is to manage these issues for Meridian
• More importantly, what do they mean for you?

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What Does it Mean for You?

• there are some cross currents for electricity
  prices
• they are still likely to increase
• some of the specific risks in the near term may
  result in some volatility
• the next 6 months include major transmission
  upgrade works
• contracts provide relief from volatility both
  specific risk and hydrology
• contract duration should match your business risk
  profile
• continue hunting down waste regardless

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Managing Electricity in Your BusinessThe
Essentials
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First things first Site Type?

• Two types of site in the electricity world

Non-Half Hourly
Time of Use
Small Commercial/Residential sites e.g. your house, small-mid size retail Large Commercial / Industrial e.g. manufacturing, hotels, supermarkets
Meters read periodically (frequency depends) Consumption recorded every half hour
Anytime is just one price Price varies (time of day month)
Network charges may be bundled into rate Network charges are separated
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Threshold varies by Network
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What charges are included in a bill?

• There are two major cost components

Energy (Wholesale purchase Retailer)

• Network (Network company e.g. Vector)

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Your Pricing Options Non Half Hourly

• Variable Pricing
• Energy component subject to change (30 days
  notice)
• Network charges change when those companies
  change their rates
• No price certainty. This is the default or Do
  Nothing option
• Fixed Energy Plan
• The Energy component of your rate is fixed
  typically for 2-3 yrs
• As above, Network charges change
• Gives you significant (but not quite complete)
  price certainty
• Select a specific tariff for your needs
• Options are determined by metering configuration
• Metering changes can enable savings
• Options differ by network
• Examples include
• Day/Night/Weekend tariffs
• Controlled rates
• Seasonality in some networks

Main Message Talk to an expert
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Your Pricing Options Time of Use

• Fixed Price (with Variable Volume)
• Meridian calls this Easiplan it is the most
  common contract
• Provides price certainty and insulates you from
  spot market fluctuations
• Pricing is shaped so that different rates apply
  at different times
• Spot Pricing
• This is 100 exposure to the wholesale market
  (incl. Admin fee)
• Expect significant variability in the price you
  pay each month
• Proportional Pricing
• Mixture of Fixed Price and Spot
• Select you want fixede.g. 80 fixed price, 20
  on spot market
• More complex options
• Spot supply with Contracts for Differences (CFDs
  or Hedges)

Main Message Talk to an expert
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Managing Your Electricity Budget

• Two primary ways to manage your budget
• Enter into a Supply Agreement
• Define what you are looking for in a supplier and
  ask Retailers to respond
• Use competition to get the best outcome for you
• Choose a supplier that will add value (we of
  course think there is only one)
• 2. Take Control of your electricity consumption
• Request data from your retailer or use their
  on-line tools (Business On Line)
• Eliminate waste! Consider undertaking an energy
  audit
• Take advantage of pricingdifferentialse.g.
  night vs. day rates
• Meridian customers, talk to one of ourAccount
  Managers.

We are here to help
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Supply Agreements Key Questions for You

• How much do you spend on electricity per annum
  and how material is it to you?
• What is your businesss appetite for price risk?
  
• How well do you understand the electricity market
  do you need help?
• Do suppliers values align with yours?e.g.
  sustainability
• Are you aware of what Retailers offer beyond of
  price? (On Line, Electronic Invoicing, payment
  terms,reporting, account management)
• If you are considering participating in asupply
  group, are the groups requirementsaligned with
  yours?

In the success game Value always beats Price
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Take Outs

• controlling consumption will become increasingly
  valuable
• wholesale price volatility reflects the place we
  live
• this volatility is not a new feature
• if you enter into contracts, define what success
  looks like before you begin
• use trusted partners to get there and ask for
  advice on how to structure along the way

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Getting on the Energy Management CycleImprove
your energy wasteline
29 August 2012
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Energy Management Cycle Westpac followed all
elements of this cycle

• Quarterly MT Report Meeting

• Monthly Reporting
• e-Smart

• Annual Implementation plan
• 6 weekly meetings

• Manage through Action Plan

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Energy Management is about reducing waste

• Reduce energy use and costs
• AND not adversely impact the operation of the
  site.
• Performance improvements need to be measured in
  KPIs.
• Westpac A/C
• Focus on making good business decisions any
  green benefits are the icing on the cake.

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You Need to Measure to Manage

• Energy management needs commitment
• Customers should expect a return on investment.
• Westpac recovers more than 2 for every 1 they
  have spent on EM.
• Energy needs to be actively managed
• Benchmarking and targets identify issues, drive
  improvement
• Regular reporting is required - add intelligence
  to information
• Action plan implementing cost effective solutions
• Dont be scared to spend money on Advice!

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Understand Your Site/PortfolioHow Much Energy
do I use? How much is it costing me?
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How does this site compare?
What is a common unit of measure? kWh? FTEs?
Output? What is the trend?How does it
compare to similar sites?
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How can I as an FM make energy savings?

• Minimise the energy costs
• Review the operational requirements of the
  current tenant
• Compare against your building plant operating
  hours
• Invest in cost-effective improvements
• Use life-cycle costing
• Start a structured programme with regular reviews

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Reduce energy costs to your site(s)

• Energy Supply Cost
• Key information
• How much has it cost me last year? and
• What will it cost me next year?
• Tender for the supply of energy
• gain best price
• Always avoid default rates.
• Our experience two out of three tenders lead to
  a change in supplier based usually on price
• Myth of Security of Supply

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Reduce energy costs to your site(s) Part 2

• Network and line costs
• Network costs are NOT fixed and NOT only Daily
  charge
• Network Optimisation
• Review nominated capacity charges (HV)
• Ensure that you are in the best network load
  group
• Check every couple of years!
• Examples
• Food In Christchurch changed load group on 3
  sites with annual savings over 160,000 p.a.
• School Increase capacity change load group,
  savings 10,000 p.a.
• Power factor - penalty charges introduced by
  Vector 2012

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Reduce energy costs to your site(s) Part 3

• Impact
• Having gained the best possible delivered energy
  price for your site or sites
• Any investment decisions can be made based on a
  solid foundation.

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Where does energy normally get consumed in an
office building?
73/20 RULE
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Review site operating requirements and current
control settings

• Establish current building system operating
  requirements
• What is plant controlling?
• time clock, security system, BMS
• What is the time on the controlling system? When
  is plant set to turn on and off?
• Review regularly as site operations change.
• Do not be surprised is time of the time clock or
  other controls are wrong!
• Lazy running - Daylight savings often see plant
  running an hour longer than required every day

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• Reset public Holidays annually
• Change for daylight savings 2x p.a.

Programme for 5 years
GOOD INVESTMENT?
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Controller Maintenance in Action

• Westpac established a set operating schedule for
  a branch and installed many smart relays to lock
  this in.
• Westpac monitors operating times using smart
  meter energy profile information
• After Hours baseload
• Weekend load/profile
• Public Holiday load/profile

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Smart meter energy profile information
Waste A/C - 108 hours/week Approx 5,000 p.a.
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Smart meter energy profile information
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Saving Energy is about Reducing Waste

• Actively manage control systems
• Building walk through - outside normal operating
  hours!
• Identify controllable loads
• Identify control options that are cost effective
• Sensor time switch Use existing control system
  or install new control systems?

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Use Life Cycle costing to establish benefit

• Life cycle costing (LCC) looks at the maintained
  life of a system over a period of time to provide
  a more accurate view of the financial benefits of
  each option. LCC factors in the
• Purchase cost and
• Energy cost and
• Maintenance costs of the system.
• There are very few energy related opportunities
  that can be justified on energy reduction alone.
  

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What is not working well in terms of Energy
Management

• A large number of sophisticated control systems
  are failing to deliver the benefits for the end
  users
• REASON No-one is actively managing these
  systems.
• This is a LOSE-LOSE High OPEX costs increases
  costs to tenants and reduces value of building.
• Unless these systems are managed in a continuous
  and proactive manner there is no financial
  benefit derived from having them installed.
• A 100,000 BMS is (often) just an expensive time
  clock

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SOLUTION

• Use a third party to manage control systems!
• Removes risk of knowledge being lost when an
  employee moves on.
• These management costs should form part of the
  OPEX for the building and be passed through to
  Tenant(s) in all lease agreements.
• Financial Benefits will exceed Management costs,
  reducing OPEX
• Creates a WIN-WIN

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Key areas to focus for low cost benefits

• Ensure the technology you already have is
  actively managed
• Use metering information.
• Saving 1 kW baseload saves more that 6,000 kWh pa
  900
• Consider professional help - it will be cost
  effective!
• You need to measure to manage.
• Monitor and report operational savings (energy
  and other system savings).
• Use action plans and targets (with regular
  meetings).
• The old adage is true - a team works better than
  an individual

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More Information or Assistance

• If you want further information on this
  presentation, or assistance with the energy
  management on your site, please contact
• Peter McKeown
• peter_at_smartpower.co.nz

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Smart Metering what it means for businesses

• Thursday 13 September, 2012
• Hamish McEwen, Business Marketing Manager
• Meridian Energy

September 2012
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A meter is a meter is a meter, unless its a
smart meter

• Records half-hourly consumption data.
• Regularly transmits consumption data.
• Remotely receives meter configuration data.
• What they are not
• A check meter
• A control device

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The benefits of awareness

• Knowing what, how, and when, power is being used
  provides for the opportunity to make changes.
• Performance monitoring
• Budgeting

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Combining and comparing data

• Benchmarking
• Industry trends and behaviours

Single site consumption compared to city average
Day time consumption patterns across industries
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Smart meters enable the development of new
pricing structures

• Measuring consumption in 30 min intervals allows
  for pricing at 30 min intervals.
• Electricity pricing in the New Zealand market
  follows supply and demand triggers, on a daily,
  weekly and yearly basis.

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Time-of-use or not time-of-use
0000
2400
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Access and deployment

• Smart meter deployment is continuing across NZ.
• Access to data is becoming available to
  customers.
• Retailers are developing systems that will
  incorporate data from different meters providers.
• Smart meters can be installed outside of roll-out
  programmes but may incur a cost.

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Smart meter takeaways

• Awareness and monitoring can save money
• Pricing plans that better fit industry
  consumption are coming
• Smart meters can be installed at customer request
  if interested talk to one us.

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Smart metering
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Why?

• To better understand electricity usage across
  multiple sites
• Identify opportunities to reduce emissions
• Lower consumption costs
• Provide real-time feedback on variances and
  potential issues
• Eliminate need for meter reading and bill
  estimates

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How?

• National deployment
• Data analysis and reporting
• Corrective actions
• Performance monitoring

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National Deployment- Site Analysis

• Photographic review of existing installation

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Deployment - Site Analysis

• At times, getting the right photo was a childrens
  game of hot and cold.

Warmer.
Warm.
Really warm.
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Deployment - Site Analysis

• At times, getting the right photo was a childrens
  game of hot and cold.

Cold!
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National Deployment - Site Preparation

• The (simplified) installation process
• Arc Innovation set up steps
• Westpac engagement to allow for installation
• Westpac to IT server management
• Meter installation
• Installation challenges
• Contractor failure
• IT hardware failure
• Insufficient space for installation
• Unusual cross-tenancy metering
• Embedded networking (under contract)

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National Deployment - Data Analysis and Reporting

• The smart meter interval data allows you to
  understand more about your sites
• Analysing the data allows you to identify
  peak/off-peak consumption, developing an energy
  index, sites with issues, etc

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National Deployment - Data Analysis and Reporting

• What the data wont tell you
• The root cause of excessive consumption
• Whether consumption behaviour is human or
  controlled

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National Deployment - Data Analysis and Reporting

• While Meridian are developing a web based portal
  for reporting and data analytics, Westpac were
  keen to realise the benefits of smart meter data.
  The reporting tool is based on a scoring system
  which rates the performance of each site on
  performance criteria
• Energy Index (benchmarked and scaled)
• Peak average (benchmarked and scaled)
• Off peak average (benchmarked and scaled)
• Consumption on weekends/public holidays

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National DeploymentData Analysis and Reporting

• Benchmarking figures
• Energy Index 161
• Peak average 9 kwh
• Off peak average 3 kwh
• These benchmarking figures are derived from the
  smart meter data. Poor performing sites were
  removed from this calculation.

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Case Study KilbirnieCorrective Action

• Post corrective action performance
• The off-peak average load for this site was
  reported as 6.1kwhr (compared to the Westpac
  branch portfolio average of 3.04kwhr).
• Work commenced at Kilbirnie branch on 26th July,
  to install the data loggers and carry out an
  evaluation of the site HVAC control system.

Savings as a result of the works undertaken
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Summary Kilbirnie

• Average weekly energy use per hour prior Smart
  meters
• 11.15 KW Per hour
• New average weekly energy use per hour
• 5.83KW per hour
• Estimated savings 6500.00 PA
• Return on investment 2 months.

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Whats Next?

• Meridian to advise on web tool and escalation
  plan
• BAU ongoing performance monitoring
• Westpac to review audit templates and audit
  protocols for service contractors reduce cost
  of fix
• Westpac to review PPM task list for service
  contractors
• Ongoing re-commissioning is essential
• Smart building controls Smart Buildings
  Smart Savings
• Focus on asset management performance
• Green Design
• Sustainability focus
• Cost Savings Bottom Line

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