NEM Public Consultation:

Friday 23 May 1997

(Video link meeting: ACCC staff with Michael Gunter)


· I come from a medical background, and have no formal training in any branch of engineering. As 100% equity holder in the 60 kW Breamlea wind generator, Victoria's largest grid-connected wind power plant, it is not too much of an exaggeration for me to say "I am the Victorian wind power industry." Unfortunately, this plant has a tiny output of only 100 MWh/year (0.1 GWh/yr), and even at full power in a 50-60 km/hr wind, produces only 0.001% of Victoria's peak demand.

· Exported energy is purchased by CitiPOWER Pty. CitiPOWER Pty and myself are willing inheritors of an energy trading agreement originally struck in 1994 between the Alternative Technology Association (former owner of the wind generator), and the former electricity utility Brunswick Electricity Supply.

· Even though it was purchased at a substantial discount, the wind generator's operation is a marginal economic activity, despite the premium "wholesale" electricity price negotiated with CitiPOWER. My primary motivation in maintaining and operating this essentially obsolete design and scale of wind power plant has been an attempt to gain a toe-hold in the marketplace for wind energy, and create a credible, reproducible model for others to emulate. This would be similar to the development of the wind power industry in Denmark, except that it would rely on a mature market to determine the value of non-polluting electricity, rather than enforced buy-back rates.

· Despite repeated representations by me to Powercor Australia (the network owner at Breamlea), the Victorian Office of the Regulator-General and the Victorian Power Exchange, I have been unable to negotiate either a network connection agreement or a formal written contract of energy trading with the other parties. The wind generator is turning, producing electricity, and I am being paid for it, but this situation is a historical anomaly set-up on the eve of destruction of the former State Electricity Commission. If anything it serves only as a warning to any potential investor in renewable power that the large market Participants will stonewall as long as possible to discourage the entry of independent embedded generators. Therefore I believe this makes a strong case for ACCC intervention to immediately ban derogations in relation to embedded generation, and set up watertight provisions in the National Electricity Law/Code to allow equitable entry for small-scale embedded generators: participant fees to be scaled commensurate with annual production, or allow wheeling based on the concept of "negative second-tier customer" (see below).

· It was the Alternative Technology Association which re-commissioned the wind generator with volunteer labour in late 1994. Their achievement serves to illustrate that this technology is well within the capabilities of responsible individuals or community groups, and despite the miniscule size of each wind power plant, can make a significant contribution to sustainable development if the idea catches on, as has occurred in Denmark.

ACCC's Agenda issues addressed:

of sites may be an important mechanism to achieve viability for small-scale, community-based renewable energy projects. e.g a new housing development where each of 100 home owners installs a 1 kilowatt photovoltaic array: they could form a consortium/co-operative to trade through the pool if their local distribution business was unwilling to match the buy-back rate of other potential customers.

Network Pricing. Schedulable (i.e. "reliable") embedded generators which are operated to match their output to local loads can significantly reduce physical network losses, and allow NSPs to further save by deferring or cancelling wires augmentation. Embedded intermittent generators (e.g. wind generators) provide no significant reliability, as defined by electrical engineers. However solar/wind power sources do provide local network support whenever the sun is shining and/or the wind is blowing, and they most certainly do not incur any additional costs to the network, unless their peak output is great enough to have necessitated network augmentation. This "network support" is hinted at in the Code Schedule 6.6 Clause 4.5 , but the relevant wording regarding the negotiation of distribution service charges/payments, namely

"This will depend on.... (iii) the degree to which any benefits to the network might accrue from the generation are shared between the Network Service Provider, the Generator and other Network Users.

seems to have a major typographical error, or have been deliberately made excessively vague. It seems to be trying to grudgingly admit that the real benefits of embedded generation should be paid for by the actual beneficiaries. I suggest the ACCC must tighten the wording in Schedule 6.6 Clause 4.5 if independent embedded generators (both the reliable and intermittent categories) are to have a fair go.

My conviction is that intermittent embedded generators should have a distribution service charge mandatorily set at ZERO dollars by the National Electricity Code, unless either party (NSP or Generator) wishes to take hard evidence of alleged costs or benefits (directly attributable to the embedded generation) to the Dispute Resolution Panel. As fairly set out in Schedule 6.6, Clause 4.5 the common service charge is not applicable to generators, and connection service charges relate only to specific connection assets involved at the generator interface.


I have dealt with the confusing terminology of so-called "loss factors" in my original submission of 20 December 1996. Being greater than unity, it would seem logical to call them top-up factors as they are to compensate for transmission losses of electrical energy in the distribution systems. (We could get bogged down in semantics, so as long as we all know what we are talking about......!......)

The whole concept and apparent validity of DLF's is crucial to the notion of separate energy traders competing throughout the system to reach contestable customers. Whatever is recorded on the customers meter is adjusted by the DLF to arrive at an adjusted gross energy, which represents the amount of energy required to be delivered through the transmission system to a designated transmission network connection point. Contestable customers who choose to buy energy from other than their local distribution business are classified as second-tier customers, and it is primarily for these customers that the DLF applies.

The "negative second-tier customer" hypothetical. Consider an imaginary business in Torquay, on the Victorian coast in Powercor's network area. It enters an energy trading (purchase) contract with CitiPOWER on what it regards as favourable terms. In this scenario, it uses 100 MWh per year, so in reality would not yet be contestable under the VPX timetable of contestability phase-in. Its use of power is intermittent. The DLF assigned to this part of the network is (say) 1.070, commonly referred to as a "loss factor of seven percent". In fact the network electrical loss is only 6.54% (see my previous submission on this!). However the adjusted gross energy is 107 MWh per year, and this is what the customer will be billed for by CitiPOWER.

I must emphasise at this point that the Code refers in several places to the basis in reality of the DLF. For example 3.6.3 (a) and Schedule 6.4 Clause 1 both refer to load flows, being the empirical data from which DLFs are calculated.

If there is any validity at all in the concept of contestability, it hinges in large part on load flow analysis and the DLFs derived from those analyses.

I contend that the energy traded between the Breamlea wind generator and CitiPOWER Pty is directly analogous to the hypothetical scenario outlined above (only the sign of the numbers changes). In the context of second-tier customer status, Breamlea is "buying negative energy" from CitiPOWER, so Breamlea wind generator becomes a negative second tier customer of CitiPOWER. I understand that CitiPOWER independently arrived at this understanding of energy trading, and when selling Ecopower, it does sell more Adjusted Gross Energy from Breamlea than is actually recorded on the Breamlea energy export meter.

Note that the energy traded is intermittent in nature, and an impartial analysis of the load flows would show that for every 100 MWh generated at Breamlea, there is 107 MWh less energy required to be delivered through the transmission system to the transmission network connection point. This argument holds true until any embedded generator's average energy output exceeds the pre-existing average load flow on that part of the network, and/or the local NSP has to augment the network locally to absorb the peak embedded generation while maintaining system stability. Wind farms will almost universally be sited in remote windy spots, and as such can routinely be expected to be near the far extremity of distribution wiring systems, where they provide the biggest network benefit in terms of avoided losses (often much higher than the averaged DLFs).

If the ACCC could take up this concept as a workable model, and enshrine it in the Code, it would go a long way towards giving a fair chance at market access for very small generators. Their potential customers would be every entity in the NEM who is entitled to have second-tier customers. They would still require the expense of half-hourly metering, but like other second tier "customers" would not need to be Market Participants. As generators, they should have no minimum threshold for contestability: buyers will be the first to tell them if the amount of energy is not worth the effort of metering it!

Any wind farm above about 1 GWh per year would probably be big enough to go the whole way and become a fully fledged Participant in the wholesale market. I understand that intermittent generators can bid into the pool at zero dollars, collect the prevailing SMP and enter into long term hedging contracts with interested buyers to achieve a price per kilowatt-hour commensurate with economic viability for a given project.

Technological Neutrality/Barriers to entry Conventional plant is big technology: renewable sources will always be relatively small plant, at least in the size of the individual units. The size differential inevitably means that the large existing technologies are favoured unless the Participant fees are scaled in proportion to the actual unit size of the technology. The likely viable size for the current generation of wind power stations ("wind farms") is likely to be in the range of 5-20 MW installed capacity. (average output would be only about 30- 40% of that).

It is imperative that the market make due allowance for the peculiarities of renewable technology, just as the Code already enshrines special consideration for the start-up time of brown coal plant, or the fact that hydro power is on occasion linked to the release of irrigation water.

Voltage IS a market issue: more volts = more bucks.

Very recent communication from both the NSW Fire Brigades and the (Victorian) Metropolitan Fire Brigades Board have demonstrated that there is no apparent increase in the rate of electrical fires on Sunday mornings (a time when low system demand has the potential to cause widespread overvoltage throughout the distribution system). This to a large extent reassures me that the concerns based on the MFB 1996 Annual Report, namely a fairly high proportion of early-morning fires occurring on Sundays, is PROBABLY NOT due to the high voltages almost certainly occurring in most Victorian households at that time.

A "Technical Review of the National Electricity Code" performed by staff from Western Power has been published on the ACCC's NEM web site. Some issues raised in my earlier submission were dealt with: (the whole document , voltage limits , safety issues , overheating of appliances, causality in fires, POWER CONSUMPTION [THIS AFFECTS YOUR POWER BILLS ! ! ], electricity supply, Line Drop Compensators, , "Dr Gunter's perceptions" - I incorrectly assumed that coarse voltage settings were dictated from terminal stations, when in fact it is suburban zone substations where your voltage is set.) Much time was spent comparing the Australian and present European standards: the Review claimed that the Australian standard is "essentially the same" as the European. In that case I call on the Australian electricity and appliance industries to immediately allow all appliances complying with European standards access to the Australian market without the requirement of further testing. Otherwise we are simply looking at a cosy, unofficial and artificial tariff barrier.

Crucially, the Technical Review acknowledges that resistive loads will use more power at higher voltage. My experiments have identified that many electrical gadgets of a basically resistive nature are permanently connected to the household wiring in nearly every home: this is where "phantom power" is used. It is low-level but occurring 24 hours a day. Consumption can typically be over 15% higher at 254 volts than at 235 volts for such appliances. Power companies can regulate voltages by switching capacitor banks, adjusting taps on distribution transformers where load profiles have changed, and by accelerating the introduction of line drop compensators (LDCs) at zone substations. If the industry cannot see the benefits of LDCs then I suggest we ask the customers if they would like better voltage regulation, leading to lower bills and fewer lightglobes bought at the supermarket. I believe significant improvements can be made without unduly impacting on the profitability of distribution businesses.

It is noteworthy that both power stations and distribution networks have to be down-rated in hot weather: LV voltage reduction should also be considered to give customers the same protection during heatwaves. This is one area which has not been adequately researched in terms of the incidence of house fires with an electrical ignition factor.

U.S. power companies claim that a 5% voltage reduction can achieve only about a 2% power reduction. My experiments indicate that their figures are highly conservative in relation to modern households filled with gadgets: a 5 per cent voltage variation will usually cause a 5 to 10 per cent variation in power consumption (in all appliances except the fridge and washing machine motors). When heat is not the customer's requirement, chronically high voltage (eg 254.4 volts) achieves only higher bills and shortened appliance life.

The use of distribution substations in public housing estates to supply LV feeders beyond those estates should be banned immediately in all jurisdictions. All public housing tenants should be guaranteed a supply not exceeding 240 volts (steady state) at any stage. This is an important public benefit and social justice issue. After all these are the people who cause so much bad PR for power companies when they get cut-off for defaulting on their bill payments.

Footnote: Useful internet links about the Australian electricity industry:

NECA application to the ACCC is at:

The National Electricity Code is online at:

This used to be the URL for the National Grid Management Council, and maybe now will have a link to NECA and/or NEMMCO (NGMC was just a transitional "setting-up" body):

DEST has some good points to make about the NEM at:

My own home page has links to my submission to the ACCC, and my web pages about the effect of 254 volts on power company profits. Also check out my hypertext online version of the Victorian Wind Monitoring Study.

Congratulations! If you have made it this far, you are definitely not a quitter. If there is some electricity industry terminology that needs explanation, I recommend the glossaries at these two U.S. industry sites. At least in the U.S. they are prepared to admit that voltage reduction can save on the customers' power bills:
Just for the record, the Australian National Electricity Code Glossary is buried in the ACCC site, but does not have a good set of links to access a particular term you might want to look up (until now that is):
Part A1: ACCC --> Business Day
Part A: call amount --> customer
Part B: data collection system --> dynamic performance
Part C: electrical energy loss --> frequency response mode
Part D: generated --> isolation
Part E: Jurisdictional Regulator --> nameplate rating
Part F: NATA --> pumping load
Part G: quantity reallocation transaction --> revised statement
Part H: satisfactory operating state --> System Operator
Part I: take or pay contract --> weighted average cost of capital

Michael Gunter