Why Things Change Transmission Assets Change is inevitable - except from a vending machine Robert C. Gallagher

Why Things Change The purpose of this presentation is to provide further insight into the reasons for the changes highlighted on the Transpower Asset reports The main reasons for these changes are: asset values switch counts interconnection substation asset allocations new or removed assets description changes

Asset Values New Assets - If a new asset has been installed on the grid the value will be the full building block value for that asset type Asset Value Deleted – It is Transpower’s policy to hold the value of Spares, Local Service and Load control assets at zero NB – this may show up as a change from last year due to the timing of the policy rollout Increase in existing asset value - An existing asset will increase in price if: i. a component part of that asset is replaced or upgraded (e.g. the circuit breaker of an HO1 switch) ii. the existing asset value has had an adjustment factor applied during the transition from ODV to the TPM methodology (current asset is not at full building block value) The increase in value will be the full BB value of that component part

Switch Counts Each switch asset contains a default number of switches based on the appropriate building block. The number of switches is made up of one or a combination of the following: Circuit Breaker default Bus default Infrastructure default A review process is undertaken annually to ensure that the switch count allocated to a specific asset correctly reflects the relevant building block default. If an error is identified, the switch count is updated. A list of building blocks and their associated switch counts has been provided in the Useful Resources section of the website

Interconnection substation asset allocations At an interconnection node, the substation asset (land, buildings, establishment and possibly oil containment) is allocated to connected customers based on the proportion to which the customer’s connection assets (at that substation) account for the replacement cost of all grid assets (excluding land & buildings) (TPM 3.59.2 c) If there is any change in assets, i.e. addition, deletions, or value changes, the % allocation may change

Asset Descriptions An asset ID may be updated to provide a more accurate description of that asset e.g. BZP3 is changed to BZ3P42 (P42 is the asset building block)

Building Block Classifications A review process is undertaken annually to ensure asset building block descriptions correctly (or as closely as possible) reflect the physical assets installed at a GXP. If an error is identified, the building block description for that asset is corrected

New Assets No Value A review process is undertaken annually to ensure that the “pricing” assets correctly (or as closely as possible) represent the physical assets installed at a GXP If there is a missing asset, a new “pricing” asset is created. If there is either duplication or a separate asset is in fact a component of another building block (e.g. D59 220kV bus CVT is a component of a DO1switch), then the duplicate asset is deleted. In the case of the VT example, if the switch is not valued at the full BB value, the VT value is added to the switch

Thank you again for your assistance. We hope you have found this presentation useful. If you have any questions, your customer solution manager is only a phone call away.