TO THE BOARD Item: 6 From: Gerard Reiter, EGM/Asset Management Date: 14 April 2015 Peter McIntyre, Managing Director Category: FOR APPROVAL SECOND SUPPLY TO THE ACT STOCKDILL DRIVE 330kV SWITCHING STATION DECISION GATE 1 Purpose Synopsis To seek approval for Project Commencement, Decision Gate One (DG1), for the Stockdill Drive 330kV Switching Station in order to address the ACT Government s requirement, set out in TransGrid s Utility Services License, for a second ACT supply. This project will ensure TransGrid fully complies with the jurisdictional reliability criteria for the ACT. TransGrid has been directed by the ACT Government to provide a second supply point into the ACT by 2020, one that is independent of the Canberra 330/132kV substation, in order to manage a contingency that may render the existing Canberra substation non-serviceable. At its November 2014 Cabinet meeting, the ACT Government selected a site at Stockdill Drive for the proposed switching station. Following this, TransGrid undertook options feasibility assessments for two alternative transmission line connection options. The preferred option for transmission line connections to the Stockdill Drive site utilises a corridor to the east. This option was selected due to its lower overall cost, lower risk in property and easement acquisition (the ACT Government will manage the easement acquisition process), and significantly reduced environment and stakeholder risk. The next stage of this project is to undertake detailed scoping of the preferred option including commencement of stakeholder consultation, obtaining environmental and regulatory approval and property acquisition. Recommendation It is recommended that the Board note the report and approve: Project Commencement (DG1) for the Stockdill Drive 330kV Switching Station; and an amount up to $3 million be expended to progress the project to Project Determination (DG2). Prepared by: Brenton Farr, Portfolio Management Office File:
2 Background TransGrid has been requested by the ACT Government to provide a second supply point into the ACT, one that is independent of Canberra 330/132kV Substation, in order to manage a contingency that may render the entire existing Canberra Substation non-serviceable. TransGrid s obligations are detailed in its recently obtained Utility Services Licence for the ACT, specifically Schedule 1 which states that: TransGrid is to plan, design, maintain and operate its networks and connection points that supply customers in the Australian Capital Territory (ACT) and that will operate at 132kV and above whether or not those networks and Connection Points are located within the ACT, to achieve the following: o o the provision of two or more geographically separate connection points operated at 132kV and above to supply electricity to the ACT network; and continue to allow electricity supply at maximum demand to the ACT network connection point(s) immediately after a credible contingency event by the provision of a switching station and augmentation of the supplying transmission lines by 2020. The preferred solution to address these requirements was to establish a new 330kV switching station at Wallaroo and associated line connections. The Board gave Project Determination approval (now Decision Gate 2) for the Wallaroo project in December 2007. A preferred site was selected, located in NSW on private property, just beyond the ACT border, on a site that provided benefits for construction due to its relatively flat nature and approximately 3km of separation from Canberra Substation. The landholder of the previously proposed Wallaroo site owns the freehold parcel in NSW and is also the owner of a 99 year rural lease for the ACT land. The landholder put forward a proposed residential development covering this site and surrounding area in NSW and the ACT. All options for the Wallaroo site impacted the proposed development and the landholder was consulted in relation to these options. Negotiations with the landholder reached an impasse. TransGrid had no legal rights to compulsorily acquire land in the ACT or to request access for the purposes of detailed land survey and property evaluation. Subsequently the project was placed on hold due to the inability to secure the required property. The Board was advised in June 2012 that the project would need to be returned to the options evaluation stage (pre Decision Gate 1). Investigations commenced for alternative switching station locations and transmission line corridors. Current position The ACT Government engaged GHD to prepare an options study for the siting of the switching station and associated transmission lines. Fifteen options were subject to a multi-criteria assessment addressing many factors including: security of supply; impact on development potential; environmental and heritage values;
3 cost of infrastructure; land use planning, amenity and health; and the ability to connect to TransGrid s existing network. Following the options study the ACT Government selected the Stockdill Drive site at its November 2014 Cabinet meeting. TransGrid was subsequently requested to undertake feasibility assessments of two possible transmission line routes to connect the proposed Stockdill Drive Switching Station to the existing Canberra Substation. TransGrid presented the findings of the feasibility studies to the ACT Government in February 2015 at a multi-party planning day. Following this, the ACT formally wrote to TransGrid advising its approval for TransGrid to proceed with the project (see Attachment One). This formal notification requested TransGrid commence the project and also advised that any difference in project cost between TransGrid s approved regulated funding for the original Wallaroo site ($39.4 million) and the new Stockdill Drive site (currently estimated at $46.6 million) would be met by the ACT Government. Table 1 Options analysis Option Option description Type of option Outcome A B C Base case option Wallaroo switching station Stockdill switching station (eastern connection) Stockdill switching station (western connection) Do nothing Network Network Network This will not meet the need to provide a geographically separate supply to the ACT. Meets the identified need. However the location is not acceptable to the ACT Government and will not be pursued any further. Meets the identified need. The estimated non-escalated cost is $46.6 million (in 2014/15 dollars). Time to complete is 56 months from issue of a Request for Project Scoping (RPS). Meets the identified need. The estimated non-escalated cost is $51.5 million (in 2014/15 dollars). Time to complete is 56 months from issue of an RPS. The credible network options identified were: Option B Establishment of Stockdill 330kV switching station (eastern connection) Option C Establishment of Stockdill 330kV switching station (western connection) These options have been assessed for technical and economic feasibility. The preferred option Review of the credible options has revealed that Option B is the most economical and least risk option as shown in Table 2. Option B is favoured over Option C due to its lower overall cost, lower risk in property and easement acquisition, and significantly reduced environment and stakeholder risk.
4 Table 2 Final options ranking Rank Option 1 B Option description Establishment of Stockdill 330kV switching station (eastern connection) Expected Capex Cost 1 $46.6m ($2014/15) Expected Opex Cost 2 $0.93m Present Value 1,3 $39.7m 2 C Establishment of Stockdill 330kV switching station (western connection) $51.5m ($2014/15) $1.03m $43.9m Notes: 1. The figures do not include capitalised interest. 2. The operating expenditure for all options is assumed to be 2% p.a. of the capex cost of the option. The operating costs are annual figures that are not included in the Present Value calculations. 3. The Present Value analysis has been calculated using a discount rate of 10.0%. Property acquisition and environmental approvals All required easements and the switching station property will be obtained by the ACT Government and transferred to TransGrid at the prevailing market cost. Funding to undertake the property acquisition in advance of Project Determination (DG2) is included in this submission to mitigate the risk of not being able to deliver the solution by the required date (2020). TransGrid will provide property support services to ACT representatives to ensure that any agreements made meet the long term operational needs for managing the new assets. The northern portion of the proposed transmission line route for this option seeks to utilise an existing Actew AGL transmission line easement. A joint use infrastructure Memorandum of Understanding or equivalent will be established to ensure TransGrid s long term interests in maintaining and operating the transmission line in a shared easement are secured. As the project involves the construction of more than 500m of 330kV transmission line, this triggers the requirement for an Environmental Impact Statement (EIS) under Part 4.2 of Schedule 4 of Planning and Development Act 2007 (ACT). In effect, TransGrid is required to obtain Development Application approval under the Impact Track assessment pathway of this Act. The ACT Planning and Land Authority (ACTPLA) will be the determining authority. TransGrid will be the proponent and manage the completion of the EIS by environmental consultants. TransGrid has already engaged with ACTPLA at the planning day and each party has outlined their expectations. Stakeholder engagement TransGrid is committed to delivering a comprehensive and targeted community engagement approach. The level of engagement during the project will reflect best practice and will utilise the International Association for Public Participation (IAP2) Spectrum of Public Participation. By following the spectrum TransGrid will develop engagement activities that support the appropriate level of engagement for each stakeholder that will build awareness and establish expectations. TransGrid and the ACT Government will work together on community consultation and stakeholder liaison. The release of a single set of consistent and agreed messages and other information is
5 paramount to the success of the project. A dedicated community liaison officer will be appointed by TransGrid and the ACT Government. The ACT Government will take the lead on consultation and negotiation with affected lessees. A draft Community Liaison Plan has been provided to the ACT Government for feedback and review. The purpose of the plan is to outline the stakeholder engagement, communications and consultation processes that are to be undertaken during the various stages of the project. The plan aims to inform stakeholders by raising awareness of the current situation and the benefits of the project. Key stakeholders and impacted property owners will be consulted through the finalisation of the design and alignment to mitigate as many issues as possible. The project is driven by reliability requirements of the ACT Government. The regulatory process for the Wallaroo project was completed in 2013 under the previous regulatory test process. Current expectations are that a full Regulatory Investment Test Transmission (RIT-T) may be required and this has been factored into the project timetable. Risk assessment The key project risks identified at this stage are as follows: There is a risk that schedule delays are incurred by virtue of delays obtaining the required statutory approvals. An EIS must be completed as a precursor to achieving Development Application approval. Early engagement has commenced with the ACTPLA and other regulatory agencies; There is a risk that suitable land tenure interests and easements will not be obtained by the ACT Government in a timeframe sufficient for proposed construction schedule. All required easements and the switching station property will be obtained by the ACT Government and transferred to TransGrid at the prevailing market rate. Funding to undertake property acquisition in advance of Project Determination (DG2) is included in this submission to mitigate delay risks; and There is a risk that suitable agreement cannot be made in a suitable timeframe with ActewAGL to develop a joint use transmission line between Canberra Substation and Stockdill Drive. Discussions have previously taken place with ActewAGL on this matter. Continued engagement and negotiation with ActewAGL to develop agreed transmission line designs, easement conditions, operating and maintenance terms is required. Next steps Upon Project Commencement (DG1) approval, detailed scoping of the preferred option will commence including stakeholder consultation, environmental and regulatory approval and property acquisition. It is anticipated that up to $3 million will be incurred on the project during the develop project phase prior to the request for Project Determination (DG2) approval by the Board. A timeline for the works showing the decision gates is included as Attachment Two.
6 Attachment One
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Prepared by: Brenton Farr, Portfolio Management Office File: Attachment Two