Lessons from Auckland

20 August 1998

The report of the Ministry of Energy's inquiry into the failure of the power supply to Auckland, New Zealand, has been published. The Inquiry was set up to examine what happened, why, and what lessons could be drawn for the future.

On 20 February, 1998, following a series of four power cable failures, Mercury Energy Limited, the major distributor and retailer of electrical power to Auckland, announced that it could no longer supply power to the central business district (CBD) of the city. For 29 days, power supply to the CBD was interrupted.

The New Zealand government instituted an inquiry on 12 March, 1998, to examine what happened, why, and what lessons could be drawn for the future.

The Inquiry published its report on 21 July, 1998, with several recommendations for the main players, including Mercury Energy, the Auckland Energy Power Board (AEPB), and the Government. The New Zealand Energy Minister, Max Bradford, said: "The Government asked Mercury to implement the Inquiry's recommendations according to a clear process and timetables. We asked Mercury to provide, by the end of 1998, an external assessment that the Inquiry's technical recommendations have been or are being fully implemented. We are confident that Mercury is taking the report very seriously and is already working to further ensure the future security of supply to central Auckland."

Investigation methodology

Integral Energy, one of Australia's largest energy suppliers, was selected to provide expert technical assistance. Integral Energy used the following process:

  • It established industry standard practice for supplying electricity to a city the size of Auckland.

  • It established the practices applied by Mercury Energy to supply electricity to Auckland CBD, and the events surrounding the power supply failure.

  • It compared industry standard practice with that of Mercury Energy.

    Electricity distribution network planning

    The network planner has to anticipate electrical load growth and develop a network to meet the future needs of customers. While achieving this, the network planner must also ensure supply security. Supply security is commonly achieved by providing supply using several smaller capacity cables instead of one large cable. The size and number of cables will be influenced by the load they supply, and the cost of the alternatives.

    Supply capacity and supply security come at an economic cost to the community. The challenge for the network owner is to find a balance between what is an appropriate level of capacity and security, and the cost of electricity to customers. While there is no recognised published standard which defines an appropriate level of supply security, accepted practice is to provide a major load centre, such as the Auckland CBD, with a sufficient range of alternative electricity supply options.

    Auckland's CBD is supplied by four 110 kV underground cables, two gas-filled and two oil-filled. The electricity supply to the CBD assumed that a failure of the gas-filled cables would result in electrical load being shared by the remaining oil-filled cables, without loss of electricity to customers. This planning strategy indicates a heavy reliance on the integrity of the oil-filled cables supplying the CBD. This reliance was based on the very good service history of the oil-filled cables compared to the poor service history of the gas-filled cables.

    During the late 1980s, it was determined that by 1997, there would be a need to enhance supply security to the CBD. It was proposed that a tunnel be constructed to carry additional 110 kV cables, and other services, into the heart of the CBD. The tunnel project was delayed by three years due to difficulties in securing a route for the tunnel. It is now due for completion by September 2000.

    A Risk Management and Contingency Plan had been developed by Mercury Energy for the cable it expected to be a problem. The plan outlined the steps to manage recovery of electricity supply in the event of a limited power failure, but did not provide for a response to a total loss of the oil-filled cables. This emphasised the reliance placed on the reliability of the oil-filled cables.

    Cable failures

    The Inquiry concluded that the cable failures were due to the following reasons:

  • Failure 1. Equal possibility of either thermo-mechanical failure or gas pressure loss.

  • Failure 2 and 3. Thermo-mechanical failure due to cyclic expansion and contraction.

  • Failure 4. Thermal runaway.

    Gas-filled cables

    The two gas-filled cables use impregnated pressure (IP) cable technology. The cables are paper insulated. They contain high-pressure nitrogen gas, this gas improving the insulating properties of the cable.

    Rigid aluminium sheathing had been used on these cables, rather than steel-reinforced lead sheathing. As a result of this, the gas-filled cables had a history of gas leakage.

    The failure of the gas-filled cables was not a surprise. IP cables have gained a reputation of being unreliable.

    Common problems with IP cables are:

  • Gas leaks associated with mechanical failure of the cable caused by vibration or unstable ground conditions, electrical load variations, or poor workmanship during jointing and installation.

  • Gas blockages within the cable resulting in under-pressurised sections of the cable, which may lead to eventual electrical failure.

  • Maintenance or repair to gas-filled cables can result in the cable being out of service for weeks, due to the work associated with de-gassing and re-gassing.

    Oil-filled cables

    The two oil-filled cables used to supply the Auckland CFB are of the type known as self-contained oil-filled (SCOF)cable. They contain oil distributed along the length of the cable, improving its insulating properties. SCOF cable has a very high level of reliability if operated and maintained correctly.

    Common problems with SCOF cables are:

  • Oil leaks due to faulty workmanship, faulty installation practices, and external damage.

  • Damage to the outer coverings of the cables, usually caused by external interference.

  • Damage to the cable during manufacture.

  • Cracks in the cable due to mechanical fatigue.

    Mercury's cable maintenance and operation standards

    The Inquiry found that the types of cables used by Auckland CBD were appropriate, and reflected the technology available at the time of their installation. Despite their age, with appropriate levels of maintenance, these cables were capable of providing a reliable standard of service when operated within their design limits.

    There was evidence, however, that the cables supplying the Auckland CBD had been operating at temperatures above their design limits from an early stage after commissioning.

    Mercury Energy does not have a detailed maintenance policy specific to pressurised cables. Integral Energy said that this critical area of maintenance appears to have been reliant on maintenance staff undertaking the maintenance based on their past experience, rather than on a formal set of procedures.

    Furthermore, contrary to manufacturer's instructions, Mercury Energy did not carry out routine cable sheath insulation resistance (IR) testing. These tests are important, being designed to highlight defects in the anti-corrosive cable covering. Such a defect can lead to corrosion, resulting in leakage.

    Integral Energy said there was no evidence that cable, ambient and soil temperature monitoring procedures were adopted by Mercury Energy. There is, however, evidence that Mercury Energy's maintenance and operating staff were not aware of the existence of all of the cable low gas alarms fitted to the gas-filled cables, although they have a sophisticated alarm display facility. Had these gas cable facilities been fully utilised, one or more of the electrical failures could have been averted.

    Factors contributing to power supply failure

    The Inquiry found that contributory causes of the power failure were:

  • Mercury Energy relied heavily on the oil cables, without investigating their actual conditions

  • While network planning was not contributory to the power supply failure, had the actual oil cable conditions and 'as built' ratings been known, a different planning outcome would have been appropriate.

  • Joint distribution and transmission planning by Mercury Energy and the grid company TransPower (and their predecessors) was not a cause of the power supply failure.

  • Mercury Energy's risk management and contingency planning for the 110 kV cables contributed to the power supply failure.

  • Mercury Energy's operations and asset management practices for the 110 kV cables were below industry standards, and contributed to the power supply failure.

  • The corporate governance structure of Mercury Energy did not cause the power supply to fail, but through its effect on governance, an opportunity to prevent the failure was lost.

    Findings of the Inquiry

    The Inquiry found, with respect to AEPB:

  • AEPB planned the Auckland CBD distribution network in a manner consistent with industry practice at the time.

  • Acceptance testing of the gas cables, at the time of installation, was not consistent with industry practice.

  • The 1988 and 1989 AEPB Annual reports indicate a high level of awareness of the unreliability of the gas cables and the potential need to advance consideration of their replacement.

  • Despite awareness of the increased unreliability of the gas cables, the cause of repetitive gas leaks on the 110 kV gas cables was not resolved by systematic investigation.

    The Inquiry found, with respect to Mercury Energy, that:

  • The CBD network was planned in a manner consistent with industry practice.

  • While Mercury Energy is a competent distribution company, it did not have the required expertise, operations and management procedures for the 110 kV cables.

  • The problem of repetitive gas leaks and faults was not resolved by systematic investigation.

  • A well-developed asset audit and asset management programme for the 110 kV cables did not exist.

  • Maintenance contracts for the 110 kV cables were deficient in specification, management and monitoring.

  • There was inadequate internal expertise on 110 kV cables and inadequate participation in external forums to remain current with cable operating and maintenance practices.

  • Specification of the 110 kV cables was not checked against the "as built" conditions.

  • Accountability and monitoring of network risk management was not overseen by the Risk Management Committee, but were handled directly by the Board.

  • The 110 kV transmission risk in 1997 was materially underestimated. As a consequence, actual security of supply was under-planned.

  • The reliance on informal arrangements for the pooling of spares for the 110 kV was ineffective, demonstrated by at least one incident prior to 1998.

  • The usual effect of corporate governance on company performance may have been compromised by lack of clear accountability.

    Future CBD security of supply

    With the de-rating of the four failed transmission cables, the supply of power to the CBD is dependent on a temporary 110 kV overhead line. This will be little changed even when the oil cables are repaired. The risk derives from the reliance on the Penrose TransPower point of supply, and the tunnel through which the temporary overhead line passes at one point. A failure at either point would result in outages in the CBD.

    Alstom and Mercury Energy acknowledged the risk associated with the overhead line. This was confirmed by Integral Energy following a route inspection. Overhead lines are typically associated with high reliability, and Mercury Energy confirmed that additional protection measures are being undertaken. While the temporary overhead line is comprised of two separate circuits, a fault within the tunnel would almost certainly spread to the other circuit. Mercury Energy said that it would need to reinforce supply to the CBD by 30 November, 1998, to achieve appropriate security during the summer peak load.

    Mercury Energy also announced that it would improve supply capacity and security by installing a new 100MVA circuit from Mt Roskill to Liverpool Street. The Inquiry praised Mercury Energy for this decision, and noted the need for the Auckland City Council to continue to work with the company to ensure completion prior to the summer peak load. The security of the Mercury Energy network must be closely monitored to ensure that it achieves an appropriate standard. Given the importance of CBD supply and the inherent risks in the current arrangements, the Inquiry recommended that Mercury Energy appoint an independent expert team to review network capability.

    Inquiry recommendations

    The Inquiry said that Mercury Energy's response to the incident, both in the immediate emergency response and the subsequent investigation, had been of a high standard.

    The Inquiry recommended:

  • Mercury Energy establish a management plan for its 110 kV transmission, recognising that it is different from distribution assets.

  • Mercury Energy have its 110 kV management plan reviewed by external experts in 110 kV cables of similar design and age.

  • Mercury Energy establish clear and definitive specifications for contract services.

  • Mercury Energy to ensure the core business of distribution and security of supply is given appropriate priority and resources.

  • Mercury Energy review its risk management processes, so that all risk is managed within one systematic process to a defined standard. On 22 June, 1998, Mercury Energy outlined measures which would achieve this.

  • Mercury Energy obtain independent validation of its current and committed plans for restoration of CBD security of supply as it will be by 1 December, 1998.

  • Mercury Energy institute periodic technical audits of all major assets associated with the CBD power supply.

  • Mercury Energy review its network services contracts for each customer class and review them to: specify reliability standards of outage times; specify liability period for each outage; and ensure that customers see and understand their risk exposure.

    Mercury Energy's customer contracts have taken a step in this direction, but the consequence is that Mercury Energy's liability is capped for events longer than three hours. With the split of line and energy services contemplated by the current legislation, network contracts will require special attention.

    Recommendations to government

  • The government to require every network operator to publish every three years an asset management plan, together with security standards for each consumer class, supply area, and voltage level.

  • The government encourages distributors to develop customer contracts for network service providers that reflect security of supply standards and liability provisions appropriate to each type of consumer, and which give network companies incentives to manage security on a commercial basis.

    Sequence of events

    Conclusions by Integral Energy

    Mercury Energy responds


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