Electricity Authority urgently investigating Transpower's role in blackouts

The Electricity Authority's urgent investigation into Monday night's blackout will centre on Transpower's role in outages that left 35,000 consumers in the dark on the coldest night of the year.

The initial phase of what will be a wider review of the industry will centre on whether Transpower systems were up to scratch. The role of lines companies and generators will be investigated in a later, wider review.

An initial report into the blackout will be made public and the authority says it will seek assurance from Transpower that any corrective actions will be done urgently.

The authority has set out in detail the chain of events which led to distribution companies to unnecessarily cut power completely to North Island consumers. Immediately after the cut, fingers were pointed by politicians and industry participants over who was responsible.

On Monday evening "a significant weather event" caused national demand to reach a record high, the terms of reference say.

At 6.40am that day, Transpower, as the system operator, notified market participants that the forecast market schedules were signalling the possibility of a shortage of supply that evening, should conditions worsen.

By 1pm, the conditions had worsened, and the system operator notified market participants that further generation offers were required to avert the risk of demand management.

By 5pm, conditions had deteriorated further, and a Grid Emergency Notice (GEN) was sent notifying market participants that there were insufficient offers to cover both energy and reserve requirements and that reserve dispatch would be reduced to provide energy supply.

About 35,000 consumers were left in the dark on Monday night. Photo / Michael Craig

At 6.48pm, all distributors were requested to reduce demand by 1 per cent and
notified that a Demand Allocation Notice (DAN) would follow. The DAN was issued at 7.09pm but contained a number of errors regarding the maximum demand limits requested of distributors.

The errors in the DAN resulted in a number of distributors, who had already disconnected load in response to the 6.48pm request, to manage their load further.

"Whereas the initial response would have had little impact on consumers (ripple control hot water and street lighting disconnection being common mechanisms), the subsequent response was enacted through disconnecting consumers completely."

As a result, four distribution companies disconnected approximately 35,000
consumers for up to two hours on the coldest night of the year to date across the country.

"With demand management being greater than required, generation was no longer dispatched as it was not required to meet the demand. This has led to the situation where consumers were without power whilst generation capacity was available," the authority said.

At 8.20pm the original GEN was revised to allow distributors to return up to 5 per cent of their current load levels. The Grid Emergency was formally ended at 9.01pm.

The authority says it and Energy Minister Megan Woods have concerns about the level of formal communication by Transpower leading up to the event.

The Ministry of Business, Innovation and Employment has been instructed by Woods to conduct a wide-ranging review.

The authority said it intends to co-ordinate with and support the broader review led by MBIE. It is intended that the review undertaken by the authority of the immediate circumstances surrounding the event will feed into the review led by MBIE.

"The authority expects full co-operation from Transpower in this review."

The authority said it sought to assure the minister and consumers that any systemic and process issues that led to the excessive demand response are urgently corrected.

The authority will achieve this through:

• A review around the system operator's demand allocation tool.
• The authority will consider whether it is fit-for-purpose.
• The authority will confirm that any fixes or updates to the tool applied by Transpower operator have been tested and the operation of the tool has been verified.
• The authority will review the system operator's processes regarding the use of the demand allocation tool and communication of its results through DAN and otherwise.
• A review of the system operator communication processes and associated protocols regarding Grid Emergencies and potential loss of supply situations, this will include the following:
- Communications to generators, distributors and direct connect consumers.
- Communications and notices to both the Authority and the Minister of Energy.
- Reviewing the demand allocation tool and how it is used by the system operator which will include looking into staff training.

Other questions include; what protocols does Transpower have for communicating significant, or potentially significant, events to the minister and authority. It would also ask for feedback from the industry to Transpower.

Phase two of the review is broad and likely to include:

• Consider all roles (system operator, electricity distribution services, generators, retailers, direct connect consumers).
• Time sequence leading up to the event.
• How the event was handled including:
- Generation and whether all generators that could run were running.
- The response by electricity distribution services.
- The treatment of medically dependent consumers.
- The response by direct connect consumers.
- Communications between all parties and with consumers during the event.
- The system operator's performance.
- Management of reserves.
- Price signals and whether these reflected underlying conditions.
- Consumer focus.

The morning after the blackout Transpower issued a statement blaming insufficient generation.

General manager operations Stephen Jay said it was fair to expect electricity to be there for people when they need it most, especially on one of the coldest nights of the winter.

Demand reached record levels of around 7100 MW between 6 pm and 6:30 pm.

"Unfortunately, there was not enough generation to meet demand. As a result, Transpower had to ask all the local lines companies and large industrial users to reduce demand to help keep the system in balance,'' he said on Tuesday morning.