Bringing new energy to transmission

Utilities Unbundled - Issue 14

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The biggest challenge in running the electricity transmission network in one of Australia's fastest growing markets? Focusing on the right things.

“We need to make sure we're thinking about things in a way that is fit for purpose. Finding that balance between cost, reliability and efficient delivery of service is key.”

— Merryn York, CEO, Powerlink Queensland

Formed in 1995, Powerlink is the government-owned, sole electricity transmission operator for the state of Queensland, with an A$6b (US$6.17b) high-voltage network comprising 118 substations and 13,930 circuit kilometers of transmission lines.

CEO Merryn York says Powerlink's greatest challenge, and perhaps the secret to its success, is its ability to “focus on the right things.”

In its almost two decades of operation, Powerlink has had to adapt to:

  • A booming population
  • Increasing regulatory pressure
  • Changing consumer behavior
  • Australia's rapidly evolving electricity industry

“It has been a real journey for us – first to adopt a commercial focus and, most importantly, to understand our role. What do customers want from us? How do they want it – and what is it worth?” she says.

It's all about the cost

Like most utilities worldwide, Powerlink operates within an environment of rising energy bills and increasing consumer and regulator pressure.

“It is all about the cost of electricity. For network businesses, particularly transmission network businesses like Powerlink, it is all about efficiency,” she says. “It is not about whether the process within the business is efficient – it's whether the transmission service has actually delivered an efficient service to the people who want to get that service.”

Regulation replaces competition

Building better relationships with regulators and customers is another priority for Powerlink.

“We have an incentive-based regulatory framework but there are questions about whether this actually works or whether policymakers need more 'hands on the levers' to achieve the outcomes they want by controlling things more closely,” she says.

Impact of CSG

Going forward, one of Powerlink's priorities will be responding to coal seam gas (CSG) mining in Queensland's Surat and Bowen basins.

“Providing the network to connect this CSG-driven demand will mean building a lot of substations and transmission lines, lots of interactions with land owners,” says York.

But Queensland's huge CSG reserves – the largest in Australia – have the potential to reduce delivered power prices for consumers: “Because we have a fixed asset base, the extra demand from CSG projects will lower the transmission cost on a per megawatt hour basis for everyone else.”

Meeting the challenge of the CSG industry and other large-scale demand was partly behind Powerlink's decision last year to divest its 41% stake in South Australia's transmission business, ElectraNet. “We preferred to use those funds to build our own non-regulated businesses, particularly around CSG.”

Fit for purpose

“We are a very technical organization and culturally people want to present the best technical solution,” York says. “But we need to make sure we're thinking about things in a way that is fit for purpose. Finding that balance between cost, reliability and efficient delivery of service is key rather than always thinking about it from the best technical point of view.”

For more information, please contact Matthew Rennie or Paul Laxon.

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