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16 January 2007 electricity supply interruptions in Victoria

What happened and why and Opportunities and recommendations

July 2007

The many factors that led to supply interruptions to Victorian homes and businesses on 16 January 2007 are much clearer in hindsight than they were to people directly involved at the time. This account has been constructed from information provided with considerable effort by many organisations. The review team thanks all stakeholders that so willingly shared their information in support of the common goal of learning from the incident so the risk and impact of future similar events can be reduced.


This document contains many acronyms specific to the electricity supply industry and related organisations involved in the events of 16 January 2007. The most common of these are:

AER Australian Energy Regulator LOR Lack of reserve generation capacity
AEMC Australian Energy markets Commission MW Megawatt – unit of power/demand/load
AGC Automatic Generation Control MWh Megawatt hour – unit of energy produced/consumed
ALS Automatic Load Shedding NEM National Electricity Market
CFA Country Fire Authority NEMMCO National Electricity Market Management Company
DB Distribution business NER National Electricity Rules
DHS Department of Human Services NSW New South Wales
DPC Department of Premier and Cabinet PASA Projected assessment of system adequacy
DSDBI Department of State Development, Business and Innovation TNSP Transmission network service provider
DEPI Department of Environment and Primary Industries TOR Terms of Reference
ESV Emergency Services Victoria UFLS Under frequency load shedding
FCAS Frequency Control Ancillary Services  VCR Value of Customer Reliability
Hz Hertz – unit of frequency (cycles per second) VENCorp Victorian Energy Networks Corporation
IVR Interactive Voice Response system VoLL Value of Lost Load
kV Kilovolt – 1,000 volts


Nothing in this report should be taken as in any way finding or implying negligence or incompetence on the part of any organisation or person. In particular, the following should be noted:

This report uses the term "avoidable error" to represent a situation where all the facilities and knowledge required to achieve a result were available at the time, but factors such as failings of design or judgement or communications break down or simple mistakes made under pressure, led to the desired result not being achieved. For example, if an essential market management facility remained unused, possibly because of staff training levels or overlycomplex user interface design; this is described in this report as an avoidable operating error.

The term "operation", "operational" and "operating" is used to encompass the whole of an organisation's activity. Unless the context indicates otherwise, its use is not limited to real time operation of the supply system by control room staff. For example, if control room staff take action that is reasonable and prudent in the light of the information being provided to them at the time by their computer systems, but the system indications they rely on reflect deficiencies in an algorithm or in target levels set for particular outcomes, this would still be described in this report as 'operating error'. Such situations may only be revealed retrospectively following lengthy in-depth analysis by experts. The fact that they may not have been apparent at the time or shortly afterwards, has not been taken as an indication that they were not errors in the sense used in this report.

Terms of reference

The review of the 16 January 2007 electricity supply interruptions has been carried out to examine and report on:

  1. The impacts on transmission line operation and power system security of Victorian bushfires in the 2005/06 and 2006/07 summers.
  2. The cause(s) of the tripping of Victoria's interconnection with NSW and the subsequent loss of load on 16 January 2007.
  3. The broad impacts on the public and businesses of the loss of load and rise in electricity spot prices on that day.
  4. The assessments that were made of the expected impact of bushfires on electricity supplies.
  5. The actions that were taken in response to those assessments, including with respect to power system operation and fire response.
  6. The actions that were taken in response to the loss of load, including with respect to the availability of supply capacity, demand management by electricity retailers and consumers, the management of load shedding and restoration of supply, and communication with affected parties including the public and government.
  7. Whether the amount of load lost, and the public and business impacts of the lost load, could have been reduced by responses reasonably taken on 16 January 2007 with the knowledge available at the time.
  8. Whether the likelihood of future supply interruptions due to the impact of bushfires on the transmission system could be cost-effectively reduced by changes to fire risk assessments, power system security assessments, fire-fighting and prevention arrangements in respect of transmission lines, power system operations, vegetation clearance requirements for powerlines, transmission line routes, transmission line construction and maintenance, and any other relevant matters.
  9. Whether the social and economic impact of future supply shortfalls could be costeffectively reduced by changes to load shedding systems and protocols, communication protocols and methods, the framework for imposing mandatory restrictions, supply arrangements to health and transport services, and any other matters.

The review has sought information from and examined the actions of the Victorian transmission company SP AusNet, NEMMCO, VENCorp, Energy Safe Victoria, CFA, Victorian distribution companies and relevant generators and retailers in the National Electricity Market. The review has consulted with relevant peak bodies to ascertain the broad impacts on the public and business of the interruptions.

Purpose and scope:

  1. This report has been compiled from data supplied by many stakeholders for the sole purpose of achieving a shared common understanding of what happened and why in the electricity supply interruptions on 16 January 2007. It has been used as a basis for development of recommendations for improved approaches to operation through future summer periods.
  2. No warranty is provided as to the accuracy or suitability of this information for any other purpose. Anyone seeking to take action on issues not dealt with in the opportunities reviewed in this report or make decisions on matters arising from the events covered here other than those recommended, should rely entirely on their own investigations.
  3. The report contains some direct quotes of statements made by other parties. Unless 0indicated otherwise, these quotes do not necessarily reflect the views of The Nous Group.
  4. In respect of the events on16 January 2007, this report focuses only on the electricity supply interruptions and restoration of supplies to the southern part of Victoria. Associated events and impacts in other states or in the northern part of Victoria (that portion that remained connected to Snowy and NSW) are not covered.
  5. Of the two distinct technical aspects of electricity system security, frequency control is covered in some detail as it directly reflects supply/demand balance in each market 'island'. Voltage control is not covered in this report to the same degree as it is less relevant to the adequacy of supply capacity and requires much more specialist knowledge to fully understand. In reading this report, it should be remembered that control of voltage at all points on the network during the major disturbance of 16 January 2007 and the subsequent restoration of supply was a major activity for the operational staff involved and placed constraints on their actions at various times.
  6. This review was carried out in parallel with a number of other reviews and does not deal in detail with more specialised matters being addressed in them. Other concurrent reviews include:
  1. NEMMCO market event and system event reviews [1]
  2. AER compliance review
  3. Internal reviews in many stakeholder organisations

The key organisations involved

The organisations most closely involved in the events of 16 January 2007 are listed in Table 1:

Organisation Role Imperatives Relevant procedures
NEMMCO Operation of NEM
National operation of the grid
Media liaison
Security of national grid Compliance with market rules Effective recovery in accordance with operating procedures Dispatch of generation
Dispatch of ancillary services
System security assessment
Network operation (by region)
Directions and instructions to participants and transmission businesses
SP AusNet Maintenance of assets Regional operation of the grid Availability of assets
Protection of assets
Security of state grid

Asset maintenance plan
Fire mitigation plan
Vegetation management plan
Network operating procedures
Auto-load shedding
Instructions to distribution businesses Operation of lines near bushfires

VENCorp Planning of the grid
Advice to government
Load shedding schedules
Adequacy of assets
Effective management of emergencies
Allocation of risk to match priorities
Emergency management procedures
Demand reduction priority schedule
CFA & DSE Fire management Protection of life and property
Containment of fires
Daily (overnight) options analysis
Incident action plans
Local load shedding
Local supply restoration
Customer liaison
Maintenance of supply to customers
Equity of impact across customers
Address special customer needs
Standard distribution operating procedures
Procedures for complex or sensitive customers
Energy Safe Victoria Standards for line clearances Protection of public safety Compliance audits
Government Policy on electricity Safe reliable competitive electricity supply Emergency management procedures and protocols
If required, declaration of emergency and issue of directions

1 Key findings and recommendations

As required by Terms of Reference (TOR) Numbers 1 to 6, this document sets out facts and analysis to answer the question 'What happened and why?' when electricity supplies to large areas of Victoria were interrupted on 16 January 2007.

A summary of the key facts and Nous's conclusions on likely causation is set out in Table 2:

What happened Why
The Tatong bushfire entered a
power line easement near
Weather conditions were extreme. Fire intensity and smoke were extreme. Fire management
teams were forced to focus on the protection of life and property near Toombullup, Archerton
and Tolmie and to prepare for the defence of Mansfield.
Two key power lines were lost to service at 4:03 pm It is not feasible to design overhead steel tower transmission lines to maintain normal service when a bushfire passes under them. Should this happen, depending on the intensity of the bushfire and level of power flow on the line at the time, the line may trip and be temporarily lost to service, but lines rarely suffer any lasting physical damage from bushfires.
The national electricity supply system split into three islands in a rapid cascade failure of six other lines. The power lines lost comprise the main link between Victoria and Snowy/NSW. The electricity supply system was set up in a way that assumed at most a single line might be lost. Other links into Victoria could not sustain imports to Victoria and were automatically disconnected by line protection systems to protect them from damage. The North and North East of Victoria stayed connected to NSW and Snowy while the rest of Victoria split away and remained connected with Tasmania. South Australia separated from Victoria to form a third island within seconds.
Electricity supply was lost in many areas of Victoria within a few seconds. More than 480,000 customers lost supply. The Victoria/Tasmania network island had a supply deficit of around 2,150MW after system separation. Automatic load shedding occurred to stabilise the core supply system. The total supply interrupted was around 2,200MW representing 480,000 customers. A further 100MW of smelter demand was removed by customer action some minutes later.
Restoration of supply commenced after 47 minutes. Full restoration of supply took four and a half hours. Problems during restoration led to a further 205,000 customers losing supply. Restoration of supply is a complex process demanding care and prudence. Operations staff
had to manage multiple priorities – identify what happened, assess the condition of assets,
secure the system, run the market and restore lost load. Securing control of the network
islands took time. Reconnection of interstate links took time. NEMMCO market management
systems place priority on securing supply for customers still connected to the network before
restoring supply to customers awaiting reconnection. The latent demand of shed load was
not represented in NEMMCO systems, so market forces were not fully brought to bear to
support restoration. For example, flows between Victoria and other states did not provide
support to Victoria for some time. Avoidable operating errors by NEMMCO also delayed
restoration and led to loss of 200MW of supply to a further 205,000 customers.
Restoration of normal electricity network configuration took eight
and a half hours
Operating practices in Victoria required the lines to be patrolled before re-energisation as
well as the agreement of fire authorities for both the patrol and the re-energisation. Clearing
the easement of fire crews and providing entry for line patrol was not achieved for five and a
half hours due to ongoing fire activity in the area
Many people and businesses
were affected
Supply was interrupted to nearly 700,000 Victorian electricity customers, including an
estimated 70,000 businesses. Activity in some large industrial plants was disrupted for long
periods (up to a week) by the disturbance. Major community infrastructure was adversely
affected, in turn affecting its users.
The economic cost to Victoria was around $500 million. The estimated 'unserved energy' was 7,100MWh. Direct impacts totalled $235 million. Substantial indirect impacts and on-flow costs (approx. $265 million) were additional to this.

Each aspect listed in Table 2 is detailed in this report. In a few areas, technical and specialist knowledge is helpful to gain a full appreciation of the issues, so a comprehensive coverage of relevant context is included. Although precise data is not always available, there is sufficient information to support the development of reliable recommendations for improvement.

The review terms of reference pose three specific questions: Term of Reference No 7 essentially asks: "Should things have been done better on the day?"

This is addressed in Table 3:

TOR No 7: Whether the amount of load lost, and the public and business impacts of the lost load, could have been reduced by responses reasonably taken on 16 January 2007 with the knowledge available at the time.

There was no single action identified in the review that if taken on the day, would have guaranteed continuity of all supplies. However, the likelihood, extent and impact of load shedding could have been substantially reduced by responses in three main areas:

  • Set-up of the electricity supply system: The loss of supply may (at best) have been entirely avoided or (at least), substantially reduced, if NEMMCO had made an early decision to reclassify the loss of the two 330kV lines as a credible contingency, recognising that this would have increased Victoria's wholesale electricity prices and disadvantaged some generators north of Victoria. In Nous's opinion, there was sufficient knowledge available to make early reclassification a reasonable response. However, this knowledge was not effectively brought to bear; assessment of risks was unstructured; and communication of the risk was inconsistent during the day.
  • Market and system operation: The loss of supply experienced by 205,000 customers would not have been necessary if NEMMCO staff skills and computer systems had been adequate to prevent a number of avoidable operating errors that occurred. There was sufficient knowledge available to make avoidance of these errors a reasonable expectation.
  • Communications: NEMMCO's execution of defined communications protocols was poor and the electricity industry's provision of reliable information to government, customers and the general public did not meet the needs of mitigation activities, nor support overall management of the situation.

From its analysis of all of the information gathered in the review, Nous formed the following conclusions on the specific aspects
nominated in the terms of reference:

Amount of load lost
Load shedding was necessary to stabilise the electricity supply system and prevent further loss of supply. The amount of load shed was close to the minimum required in the circumstances, although minor improvements may have been possible. Reclassification by NEMMCO of the loss of both lines as a credible contingency would have reduced the amount of load shedding by at least 500MW and may have entirely avoided it. Avoidable errors by NEMMCO staff caused loss of 200MW of supply to 205,000 customers. Neither demand side response capability, nor Victoria's level of installed generation capacity, contributed to (or were potentially relevant to) the outcomes.
Public impact
The type of automatic load shedding involved occurred as designed at the transmission level, which precludes discrimination to protect individual sensitive loads such as hospitals and public transport supplies which did not have back-up supply. Opportunities may exist to improve procedures within distribution businesses to achieve faster restoration of supply to public transport and major businesses. Improved communications would have
assisted effective mitigation efforts and supported public confidence. Communications protocols on the day did not directly address stakeholder needs in major load shedding incidents and execution of these protocols was poor.
Business impact
The review identified no specific opportunities for reduction of the impact on business customers as a class. The second load shedding event at 5:45 pm was performed manually at the local level and more selectively preserved supply to business customers than the initial 4:03 pm automatic shedding of large blocks of load.

Term of Reference No 8 essentially asks: "What cost-effective changes can we make to reduce the likelihood that such events might occur in future?"

This is addressed in Table 4:

TOR No 8: Whether the likelihood of future supply interruptions due to the impact of bushfires on the transmission system could be cost-effectively reduced by changes to fire risk assessments, power system security assessments, fire-fighting and prevention arrangements in respect of transmission lines, power system operations, vegetation clearance requirements for powerlines, transmission line routes, transmission line construction and maintenance, and any other relevant matters.

The review revealed clear opportunities to reduce the likelihood of future similar events, through potential improvements in:

  • Risk and security assessments: A better decision making process for reclassification of contingencies when fires threaten major transmission lines, could have led to a reclassification decision and reshaping of the market to possibly accommodate the loss of the lines without loss of supply. Improved strategic liaison between the electricity industry and the fire management industry may have alerted senior management and increased the expertise brought to bear for a clear risk assessment and decision. Improved information management on asset protection priorities when fires are threatening key transmission lines, may have increased overall awareness of what was at stake in the situation.
  • Transmission line operation: Different operation of the power lines affected by fires may have been possible, to minimise the likelihood of loss of both lines without compromising the safety of fire crews and the public, e.g. prompt reclose of lines tripped by fires.

From its analysis of all of the information gathered in the review, Nous formed the following conclusions on the specific aspects nominated in the terms of reference:

Fire risk assessment
Strategic liaison between the fire management industry and the electricity supply industry should be strengthened at senior management and government levels to complement and support the linkages that currently exist at operational levels. Inter-industry strategic liaison and wider sharing of information on the
relative value of critical transmission assets threatened by fire would assist in more effective management offuture risk situations
Power system security assessment
Power industry procedures for reclassification of a non-credible contingency (loss of multiple lines to a bushfire) as credible should be clarified and strengthened to include a structured risk assessment based on defined roles, and supported by analysis of NEM-wide historical data on incident outcomes. The results of these risk assessments should be made publicly available as they are undertaken.
Fire fighting and prevention
Under the conditions that applied on the day, it would not have been reasonable to expect fire management authorities to be able to prevent the fire reaching the transmission lines. The review identified no specific opportunities for improvements in fire fighting and prevention.
Power system (transmission) operations
SP AusNet's operating procedures for re-energisation of transmission lines after they have been tripped by bushfires should be reviewed to assess options and potential benefits of revised procedures that maintain lines in service by prompt reclose without compromising the safety of fire crews and the general public.
Vegetation clearance
Vegetation clearance was not a factor in the events. Recent independent audits found the easement complied with regulated standards. Bushfires produce flame heights that exceed any realistically achievable clearance standards, so changes to standards would not significantly reduce risk of loss of lines. It is not
certain that the presence of softwood plantations adjacent to the easement contributed to the loss of the lines as flame heights on the day likely exceeded clearance between the line and the easement vegetation
directly below it. This is consistent with the pattern of flashovers extending from one side of the easement to the other over a period of minutes. Previous similar losses of lines to service are reported to have occurred
due to native eucalypt forest fires and grass fires.
line routes
Separation of line routes may reduce but would not eliminate the risk of coincident loss of multiple lines. For example, lines nearly 100km apart were simultaneously lost to service multiple times in 2002 fires in NSW.
Route separation is unlikely to be cost-effective. A new line from Melbourne to Snowy/NSW could cost $1 billion and would require substantial clearing in national parks and native forests north of Melbourne.
Line construction and maintenance
Line construction and maintenance was not a factor in the events. All overhead transmission lines are vulnerable to bushfires, though they rarely suffer permanent damage. Underground cables are immune to bushfires but are prohibitively expensive for long haul bulk energy transmission. The transmission lines
involved were in good condition and well maintained. They had recently passed a full inspection.
Other matters:
Rule changes
Given the rarity of such major incidents, appropriate changes in the National Electricity Rules are desirable to ensure that the identified improvements in reclassification decision procedures are sustained.

Term of reference No 9 essentially asks: "Given such events may still occur in future, what cost-effective changes can we make to reduce their impact?"

This is addressed in Table 5:

TOR No 9: Whether the social and economic impact of future supply shortfalls could be cost-effectively reduced by changes to load shedding systems and protocols, communication protocols and methods, the framework for imposing mandatory restrictions, supply arrangements to health and transport services, and any other matters.

The review revealed clear opportunities to cost-effectively reduce the impact of any future incidents through improvements in:

  • Market management: Much faster supply restoration may be possible with market management systems that fullyrepresent the latent demand of shed load, so dispatch of available generation and market price signals provide maximum support to restoration. Action on this opportunity should be underpinned by changes to the National Electricity Rules to
    establish a clear obligation for NEMMCO to promptly restore supply to loads that have been shed, and to establish a governance and performance management regime for progressive improvement in performance in restoration activity.
  • Communications and information management: Capability is required to deliver prompt comprehensive advice on the status of supply across Victoria at the relatively detailed level of distribution feeders. New communications protocols are required to provide improved support to government, emergency services, electricity customers and the general public when supplies are suddenly lost across a wide area of the state.
  • Distribution business procedures: Development of procedures for faster restoration of supply to sensitive loads such as hospitals and public transport are needed, if necessary using substitution of supplies from other less critical loads.

From its analysis of all of the information gathered in the review, Nous formed the following conclusions on the specific aspects
nominated in the terms of reference:

Load shedding systems and protocols
The automatic load shedding system worked broadly as designed and achieved the design objective of quickly stabilising the Victorian electricity supply system to prevent much more extensive loss of supply. Some improvements may be possible and this opportunity is being considered by NEMMCO technical experts. A review is also underway by Victoria's demand Reduction Committee chaired by VENCorp.
Communications protocols & methods
A new communications protocol has been defined by VENCorp and NEMMCO in response to the incident. It specifically covers situations of major load shedding and incorporates lessons learned. NEMMCO has already implemented significant upgrades to its communications capability. Fast collation and dissemination of status information (especially information on who is off supply and who is still on supply) would support more effective mitigation action by many parties. Current electricity industry systems do not address this requirement and more detailed investigation is needed to test the feasibility of solutions.
Framework for imposing restrictions
Power restrictions were considered, but not required. Decision making was hindered by the prolonged uncertainty in the status of the affected transmission lines because the easement remained too dangerous for inspection crews to enter. The revised transmission line operating procedures mentioned in Table 4 are likely to mean lines are more likely to remain energised, reducing the future likelihood of such delays
Supply to health and transport services
It is possible that revised procedures within distribution businesses may deliver faster restoration to hospitals and public transport as the number (tens) of locations involved is relatively manageable. Hospital back-up systems generally worked well. Four hospitals had problems with their back-up facilities, only one of which (Geelong) had persistent problems, so the need for special procedures for hospitals may be limited to provision of a safety net for failure of local back-up supply arrangements. In contrast, transport supplies cannot be cost-effectively backed up and disruption to train and tram services would be significantly reduced by faster supply restoration. Traffic lights and mobile phone towers cannot be easily addressed by special procedures as numbers are much higher (from several hundreds to some thousands) with locations dispersed across all supply areas. Local battery backup supplies may remain the best solution, but are not feasible for older style traffic lights. They may become more so as new technology is progressively introduced over coming decades.

Any other

Market operation
to support supply

The most direct opportunity to reduce impact is to speed up supply restoration. NEMMCO's analysis of events on the day show that its market management systems did not dispatch generation, nor set regional
prices, in a manner that reflected the needs of customers awaiting restoration of supply. Market prices fell in Victoria, as available generation exceeded the demand of loads still on supply after the load shedding. These low prices resulted in export of Victorian power to South Australia, even though Victorian customers
were still off supply. An approach which better represents the latent demand of shed load in the dispatch of generation and associated market prices, would harness competitive market forces to speed up supply restoration. NEMMCO's processes are essentially determined by the National Electricity Rules, so rule changes are warranted to establish a formal NEMMCO obligation to restore supply promptly.
line operation
Improved procedures to ensure earlier access to easements affected by fires may have shortened the time the transmission lines were unavailable for normal service. If one or both lines had been restored within an hour or two, they could have enabled much faster supply restoration. Earlier restoration to normal service
beyond three hours may still have enabled an earlier decision that power restrictions were not likely to be required for the following day

Later sections of this document set out analysis to answer the question 'How can we do better in future fire seasons?'

A summary of the recommendations identified in the review is shown in Table 6:

No. Recommendation
1 Develop improved arrangements for management and dissemination of information to better inform all relevant parties of the criticality of transmission lines threatened by bushfires. This information will inform government and fire management authorities planning activities and risk analysis for future fire seasons. This recommendation includes new processes for stronger strategic liaison between fire management and electricity industries and between the government agencies that have responsibility for them. SP AusNet will lead this initiative to deliver new arrangements by December 2007.
2 Review operating procedures for re-energisation of transmission lines tripped by bushfires to identify options and assess the potential benefits of changes in current practices. SP AusNet will lead this review with CFA, DSE and ESV as key stakeholders. This will require review of research in the science of vegetation fires and electric arcs, so completion of this initiative will extend beyond 2007. A quicker interim joint review should identify any minor improvements that can be achieved by December 2007.
3 Develop joint CFA/DSE/SP AusNet procedures to ensure the earliest possible easement access for line inspection when required to restore a high priority transmission line to service. SP AusNet will lead this work with CFA and DSE. Existing procedures will be reviewed to identify any improvements that can be achieved by December 2007.
4 Implement the new communications protocols and processes identified in the April 2007 NEMMCO paper titled Communications protocol and process relating to major system events that result in widespread load shedding. NEMMCO will lead this as a national initiative based on work done following the 16 January 2007 incident by Victoria's
Communications Committee chaired by VENCorp. This new protocol should be in place by December 2007.
5 Review with network (transmission and distribution) businesses, the feasibility of fast provision of consolidated customer status (e.g. a state wide map showing areas off supply) to government, emergency services and other stakeholders. VENCorp should lead this initiative working with DPI, SP AusNet and the five Victorian distribution businesses. This
initiative will extend beyond 2007.
6 Assess options for faster delivery of information to emergency services, preferably within minutes of a major incident. VENCorp will work with Victoria Police to explore and assess options to better meet the needs of emergency services and develop procedures to address them. New procedures should be in place by December 2007.
7 Review and improve decision making procedures for reclassification of non-credible contingencies as credible. NEMMCO should work with VENCorp, DPI and SP AusNet, to put improved procedures in place by December 2007.
8 Modify the National Electricity Rules (NER) to support new and improved decision making procedures for reclassification of non-credible contingencies as credible. National agreement on rule changes to formalise the new procedures arising from Recommendation 7 will extend beyond 2007. DPI will lead this initiative.
9 Modify the NER to include a specific obligation on NEMMCO to promptly restore all load that has been shed in major system incidents and establish effective accountability for its performance in meeting this obligation. This rule change will require national consultation and is likely to be completed in the longer term. It will drive modifications to market
management systems in the longer term to reflect the latent demand of shed load. DPI will lead the rule change initiative.
10 Establish distribution business procedures for faster restoration of supplies to key public transport infrastructure and to better manage the exceptions where other sensitive loads (e.g. hospitals) experience persistent problems with local backup facilities. This will be lead by VENCorp working with established industry consultation forums to achieve incorporation
in Victoria's emergency procedures by December 2007.
11 Provide guidance for all customer segments on back-up supply options and maintenance to improve the immunity of key infrastructure, small business and residences to power supply interruptions.
12 Investigate options for refinement of load shedding and restoration arrangements to reflect critical infrastructure priorities.

A full discussion of the rationale and scope of each recommendation is contained in the full report.

This review also identified two issues that may warrant further consideration in the longer term:

  1. Value of unserved energy: The estimated economic loss caused by the incident indicates that the value of customer reliability for major incidents may be higher than generally accepted. The value revealed in this review is of the order of $60,000/MWh. VENCorp regularly refreshes its research on the value of customer reliability for the purpose of assessing returns on investment in new transmission capacity. VENCorp has already indicated that it will include consideration of the results of this review in its next research project planned for completion within 12 months.
  2. Value of Lost Load: The $60,000/MWh figure is also of potential interest to ongoing NEM development, as it represents a particular measurement of the Value of Lost Load (VoLL). Market design theory indicates VoLL should be an allowable market price if the market is to provide correct investment signals for new capacity, either generation capacity or demand side response capacity. The current market price cap of $10,000/MWh precludes price signals at the level of VoLL estimated in this review.

2 Executive summary

2.1 The framework for analysis

This document sets out the facts of what happened on 16 January 2007 in a way that sheds light on why things happened and the impact on the State's economy and communities.With reference to the Terms of Reference, the key questions addressed are:

  1. Could the fire have been kept away from the transmission lines?
  2. Could the lines have stayed in service when the fire reached them?
  3. Could the electricity supply system have been set up to avoid loss of supply when the lines were lost?
  4. Was the load shedding necessary? Was it excessive? Could it have been more discriminating to protect key infrastructure?
  5. Were supplies restored as fast as possible?
  6. What was the extent of the supply interruptions caused by the incident?
  7. What was the economic impact of the incident?
  8. What was the impact on the community?
  9. Were people kept informed about what was going on?

The answers to these questions have been used to identify key areas of opportunity for improvement. Recommendations for cost-effective improvements have been developed for each of these opportunity areas.

2.2 The fire and the transmission lines

The Tatong fire started from a single lightning strike on 11 January 2007. Five days later, individual spot fires had merged to cover a large area of rugged bush country with many steep hillsides and deep gullies. For some days, fire predictions indicated that the fire could sweep the main transmission line easement near Toombullup and Tolmie and spread southwards towards Mansfield.

On 16 January 2007, fire conditions were extreme with high temperatures (for Melbourne, it was the second hottest day of the summer), freshening winds and erratic fire behaviour. A total fire ban had been declared for all areas of the state and all available fire fighting resources were committed to respond to new threats and manage 166 active fires.

On the morning of 16 January 2007, the Tatong fire escaped a back-burn done the previous night and spread southwards under the influence of freshening gusty North winds. A number of small communities comprising 50-100 houses in total were at risk and fire threat warnings were issued to residents. Later that afternoon and evening, five houses were lost in the Toombullup area. Fire authorities were able to prevent loss of houses in communities at Burders Lane, Archerton and Tolmie. No lives were lost.

The transmission lines in the easement swept by the fire included two 330kV lines that comprised Victoria's main electricity link to Snowy and NSW. Two 220kV lines were also located in the easement, but these were of lesser importance to the interstate interconnected power grid.

Flame is a conductor of electricity and when it bridges the gap between power line conductors and ground via vegetation or tower frameworks, the line is automatically disconnected by control systems at both ends to protect it and its surroundings from damage. At the time of the incident, the gap between the line conductors and easement vegetation below them was potentially as little as three metres.

When the bushfire approached the transmission line easement, the 330kV line closest to the fire flashed to ground, was immediately de-energised and successfully reclosed to normal service after nine seconds. Three minutes later, while SP AusNet's network operator was preparing to discuss with NEMMCO whether to reset control systems to prevent the line being 'locked out' of service should it flashover again, it flashed to ground again and remained out ofservice in accordance with its control system settings.

Twenty-five seconds later, the second 330kV line (in the centre of the easement) flashed to ground and was immediately de-energised, severing Victoria's main link to Snowy and NSW. This line was not locked out but did not reclose because by the time reclose would normally be attempted, the national system had split into three islands. This caused the line's protection systems to block any reclose to avoid risk of damage through uncontrolled reconnection.

The design of the lines, together with the relatively wide easement and the low level of easement vegetation, had encouraged electricity network operations staff to assess the lines as likely to withstand the bushfire. However, experts confirm any overhead power line, regardless of design, can be lost to service when a bushfire passes under it. In previous incidents in January and December 2006, the same 330kV lines were lost to normal service due to bushfires. Similar incidents have also occurred with identical lines in other jurisdictions.

Victorian practice is for a single automatic attempt (called a single shot reclose) to restore a line lost to service. If it fails again, the line remains out of service until it is inspected by patrol. This practice is designed to avoid the risk of multiple energisations of safety hazards such as lines on the ground, and is relatively conservative compared to the range of practices in other NEM regions where lines can be restored multiple times in bushfire situations.

With the wisdom of hindsight, Nous believes five conclusions can reasonably be drawn from the available facts:

  1. Given the conditions that applied on the day, it was not reasonable to expect that fire authorities could have kept the fire away from the easement.
  2. Historical experience demonstrated a clear material risk that both lines would be lost to service if a fire crossed the easement.
  3. It is not certain that the presence of softwood plantations adjacent to the easement was a contributing factor in the loss of the lines.
  4. Use of different line restoration practices may have increased the probability that system separation and load shedding could have been avoided, but would not have guaranteed it.
  5. The lines and easement were in good condition and their condition was not a contributing factor to loss of the lines.

2.3 Protection of security of supply on 16 January 2007

Victoria is one of six regions in Australia's national electricity market. Security of supply across all market regions is managed by NEMMCO in its role as market and system operator. NEMMCO uses procedures and computer systems that set up the system so that supplies can be maintained in the event that any single element (generator, transformer or transmission line) is lost to service.

NEMMCO has the legal right to declare credible an event that would normally be regarded as not credible. If it reclassifies an event as credible, it must then attempt to set up the supply system in a way that ensures supplies will not be lost if the event occurs, even if this means higher prices or other disturbance to the market. NEMMCO reclassifies events on a relatively routine basis, mainly on reports of lightning activity close to the links between Victoria and South Australia and between NSW and Queensland. In December 2006, NEMMCO declared three reclassifications for Victorian transmission lines threatened by bushfires, including two
for the particular lines lost on 16 January 2007.

On 16 January 2007, the loss of both of the two 330kV lines linking Victoria to Snowy and NSW was not declared a credible event. Hence, the system was set up to survive the loss of either one of the lines (referred to as a single contingency), but not both (referred to as a double contingency).When these two lines were both lost because of the fire, a fast cascade failure led to system separation, removing all four lines in the easement from normal service and causing major load shedding. It is not possible to be certain how many lines would have been lost to service due to the fire if system separation had not occurred.

In reclassification decisions, NEMMCO states that it relies on the advice of transmission network service providers such as SP AusNet. The National Electricity Rules contain a 'reasonable endeavours' obligation for SP AusNet to inform NEMMCO of any circumstances that lead to significant increase in risk to their assets. Neither the rules nor formal operating procedures fully and precisely define the roles, responsibilities and legal status of parties other than NEMMCO, that may have input into reclassification decisions.

At 2:26 am on 16 January 2007, the CFA Incident Control Centre at Benalla alerted SP AusNet Network Operations Centre that it expected the fire to approach the lines at a glancing angle and 'be interfering with them by lunch time' if the weather eventuated as forecast. SP AusNet promptly relayed this advice to NEMMCO, reminding it that the lines had tripped last time this happened and suggesting reclassification. At 6:06 am, SP AusNet called NEMMCO again to check on their analysis of the reclassification option, but this had not yet started. Later that morning, NEMMCO reviewed changes it would have to make to its computer systems if a
reclassification were to be declared.

During the morning, the tenor of communications changed, with advice from an SP AusNet field observer that the fire was moving slowly and parallel to the easement. This was supported by advice from SP AusNet's Incident Response Team to NEMMCO that they believed the loss of multiple lines, while possible, was unlikely. The fire was being closely monitored and there was no set deadline for a reclassification decision.

SP AusNet reported 'no immediate threat to the lines' right up to the time they were lost. At 3:50 pm, ten minutes before the first line loss, SP AusNet's network controller called NEMMCO to advise that while the fire was running parallel to the easement, it had now entered the easement and while it 'didn't yet seem to be threatening the lines', it will probably 'get under the lines'. NEMMCO pointed out that if both lines were lost it would probably mean load shedding in Victoria equal to the power flowing on the lines. SP AusNet advised they did not expect to lose both lines, only 'one at a time'.

At 4:00 pm, three minutes prior to the incident, Victorian demand was reaching record levels at 9,060MW. Power imports to Victoria were at near maximum levels approaching 2,500MW. Imports from Tasmania and South Australia were at maximum available link capacity [2].

With the wisdom of hindsight, Nous believes nine conclusions can reasonably be drawn from the available facts:

  1. The progress of the fire towards the easement was consistent with the prediction provided by the CFA Incident Control Centre at Benalla to SP AusNet at 2:26 am in nearly all respects except timing.
  2. At 2:33 am, SP AusNet clearly communicated to NEMMCO that the fire was expected to reach the lines, that the lines may trip as the fire approaches them (as they did 'last time') and that reclassification of the contingency was an appropriate option to consider.
  3. The CFA Incident Control Centre at Benalla did not at any stage vary its prediction that the fire would reach and enter the easement. It continued to issue urgent threat warnings throughout the day to communities in the area, including Toombullup which is on the other side of the easement from the fire's approach, via the CFA Emergency CoordinationCentre at Tally Ho.
  4. The force of the CFA predictions was weakened during the day by the electricity industry's reliance on more optimistic observations from a single SP AusNet observer in the local area.
  5. Communications from the SP AusNet Incident Response Team to NEMMCO and others during the day reflected an opinion that concurrent tripping of both lines was unlikely if the fire reached them.
  6. Opinions offered by the SP AusNet Incident response Team were based on limited experience of two previous events in Victoria. The extensive body of historical data on loss of 330kV lines to fires (mainly in NSW) was not effectively brought to bear on the
    assessment of risk.
  7. The option of reclassification of the event as a credible contingency was not actively driven to a clear decision by NEMMCO. The decision to closely monitor progressive development of a critical situation may have been a subtle barrier to more decisive action.
  8. Given that loss of multiple lines was not declared a credible contingency, the national electricity supply system was correctly set up in accordance with rules that require it to survive loss of a single line or the largest generator in each region.
  9. If the loss of both Melbourne to Snowy/NSW 330kV lines had been reclassified as a credible contingency, loss of supply may have been entirely avoided (and would certainly have been greatly reduced). NEMMCO simulations show that if any one of the four lines in the easement affected by the fire had remained in service, automatic load shedding would likely have been avoided. Some demand reduction within minutes may have been required but this could most likely have been met by manual load shedding within the amount of smelter load available, i.e. non-smelter customers could have remained on supply.

2.4 Loss of customer supply

Following the loss of the two 330kV lines, six other lines tripped in a two second cascade failure ending in complete separation of Victoria from Snowy and NSW, followed within a few seconds by its separation from South Australia. Victoria remained connected to Tasmania via the Basslink undersea cable. The separation from NSW was not at a market region boundary – a fact that would later adversely impact restoration activities. Part of Northern Victoria (areas supplied out of Shepparton, Glenrowan, Wodonga and Mount Beauty terminal stations – about 5% of Victoria's total demand) remained connected to Snowy and NSW.

The system separation left the main Victorian island with a supply deficit of more than 2,100MW. Load shedding of 2,200MW occurred within four seconds to stabilise system frequency and avoid risk of descent into a 'black system' condition. Some load dropped off the supply system due to the fluctuations in system voltage and frequency that occurred. Another 100MW of load was removed by a smelter operator some minutes later, but this action was not directly related to the disturbance.

As a result, at 4:03 pm around 480,000 Victorian customers suddenly lost electricity supply. The load shedding was conducted by automatic systems at transmission network level in large blocks (entire suburbs, towns and regions) with no possibility of granular discrimination between customers. The load that was shed was predetermined by Victoria's Emergency Demand Reduction Committee chaired by VENCorp in accordance with long established procedures.

With the wisdom of hindsight, Nous believes four conclusions can reasonably be drawn fromthe available facts:

  1. The operation of the automatic load shedding systems maintained by SP AusNet under NEMMCO direction was necessary.
  2. The automatic load shedding systems operated successfully to safely stabilise the supply system after a major disturbance. This was the first 'live' test of these systems in Victoria.
  3. The amount of load shed was only slightly greater than the supply/demand deficit that had to be corrected when the lines were lost. There may be some opportunity for improvement in system settings to reduce this over-correction in future.
  4. In this type of fast automatic shedding of bulk loads (i.e. at transmission level), it is not possible to protect particular customers to minimise disruption to essential services, nor is it possible to distinguish between customer classes to limit economic impact.

2.5 Restoration of customer supplies

All customer supplies were restored by around 8:30 pm.

NEMMCO managed the supply restoration process, providing instructions (and some directions [3]) to market participants and SP AusNet, which in turn provided instructions to the five Victorian electricity distribution businesses. The four and a half hour restoration period involved many complex activities and was strongly influenced by relatively obscure aspects ofthe intertwined operation of the national market and national power grid.

The restoration process fell into three broad phases:

  1. a. Stabilisation period: In this first 40 minutes, key tasks carried out by NEMMCO operators included identification of what had happened, assessment of assets available (the four lines in the easement were potentially damaged by fire and remained out of service), stabilisation of the system (three separate network islands had to be stabilised), representation of the new reality to the market management computer systems so that market processes could assist rather than hinder system operations,and commencement of re-establishment of the interconnected power grid. No supply was restored in this time. Reconnection to South Australia was achieved 40 minutes after separation and was delayed perhaps 10-20 minutes due to the split of the system into three islands rather than two.
  2. Main period of restoration activity: This two and a quarter hour period included restoration of all smelter supplies within or close to defined outage duration limits as well as restoration of some general customer supplies. Features of this period included:
    1. For more than an hour of this period, restoration progress was affected by errors in NEMMCO operations that led to its computers effectively 'seeing' more generation and less demand in the Victorian region than was actually there. These errors included
      1. Non-use by NEMMCO operations staff of a facility designed to inform its computer systems that demand would shortly increase due to restoration of large blocks of load. This error caused the NEMMCO computers to not correctly anticipate the increase in demand as load was restored, so the computers did not correctly increase generation to match
      2. A misrepresentation of the physical separation of the network in the computers that apply market rules – an error arising in part because the system had not separated cleanly at a market region boundary. This error caused the NEMMCO computers to see up to 200MW of generation in Victoria that was in fact connected to Snowy/NSW
      3. An automatically generated adjustment to the computer's view of Victorian supply/demand balance called the 'aggregate control error' (which in normal circumstances is used to adjust for the occasional non-compliance of a generator) exacerbated the situation for a short period.
    2. iThe amount of 'regulation' frequency control ancillary services (regulation FCAS) enabled by NEMMCO in Victoria was too low to overcome the combined effects of the above errors and the Victorian frequency fell below target levels.
    3. At around 5:45 pm, NEMMCO was forced by the low system frequency to call for manual shedding of a further 200MW of Victorian customer load to restore system frequency to its target range. This load shedding was manually carried out at the local level by electricity distributors with a degree of discrimination between customer classes and some protection of critical services. An additional 205,000 electricity customers lost supply in this action, i.e. the number of customers affected by supply interruptions increased a further 45%, from 480,000 to nearly 690,000.
    4. The interconnectors linking Victoria to Tasmania and South Australia did not play a major role in supplying power to Victoria due largely to market outcomes. These outcomes arose because NEMMCO market management systems do not reflect the latent demand of shed load awaiting reconnection. Aspects of the errors described above also contributed to these outcomes. South Australia imported up to 200MW of power from Victoria in this period, while Basslink flow into Victoria was limited to a level around 200MW, i.e. 280MW less than its pre-incident flow. These
      interconnector flows determined by market operation effectively denied Victoria energy supply equal to around 25% of the total energy not supplied to customers in the period of supply interruption.
  3. Final restoration period: In the 30 minutes following reconnection to NSW, supply restoration proceeded smoothly at a rapid pace and at 7:15 pm NEMMCO issued an instruction that all supply could now be reconnected. Over the following hour, distributors continued to restore the last 10% of supply until the last remaining supplies were restored by around 8:30 pm

Only about 1,600MW of the initial 2,150MW deficit had to be restored. About 750MW to 1,000MW of the normal 'hot day' demand did not reappear when all supplies were restored.

The available facts raise a number of issues related to the supply restoration process managed by NEMMCO. With the wisdom of hindsight, Nous believes four conclusions can reasonably be drawn from the available facts:

  1. The National Electricity Rules do not include any formal obligations on NEMMCO to restore load that has been shed. Specifically, NEMMCO's obligation for security of supply does not cover restoration of shed load.
  2. NEMMCO operations staff decisions on the day were largely consistent with the procedures they are obliged to follow under the National Electricity Rules [4].
  3. There is scope for faster load restoration in future similar incidents through improvements in NEMMCO systems, training of NEMMCO operations staff in load restoration procedures and increased FCAS levels when major disturbances occur.
  4. If everything had gone perfectly during supply restoration, the number of Victorian customers affected would have been reduced by at least 205,000 and the supply restoration period would have been significantly shortened, perhaps by more than an hour.

2.6 Economic cost

A total of approximately 690,000 Victorian electricity customers were subject to supply interruptions in the events of 16 January 2007, including around 70,000 businesses. The total unserved energy is estimated at 7,100MWh.

Based on research commissioned by VENCorp in 1998 and 2002, the likely direct cost to electricity customers was of the order of $235 million. However, on the 16 January 2007, there were significant disruptions to public infrastructure services especially to transport, telecommunications and healthcare, which in turn created further adverse impacts, including costs to many people not directly affected by loss of supply. A conservative estimate of 25% additional costs caused by these indirect impacts has been used to derive the total direct cost of $300 million.

The total economic impact is estimated at around $500 million when the normal economic multipliers are applied to account for the full on-flow impacts to the State's economy.

A range of major industrial customers were severely impacted by the system disturbance and loss of supply. Millions of dollars worth of partly finished products were scrapped, production lines were shut down, often until the start of the next shift. Chemical and refinery processing did not return to normal for periods of up to a week. Some businesses will suffer ongoing penalties in financial contracts due to the interruption to normal production. Based on a small sample of businesses surveyed, the direct cost of the event to single large business enterprises ranged from $50,000 to over $30 million per site affected.

2.7 Community effects

Many key public infrastructure services were severely affected by the supply interruptions. Transport, telecommunications and healthcare were the worst affected public infrastructure services:

  • Major traffic delays were experienced across the metropolitan area from the time of the first load shedding throughout the evening peak period. Road traffic signals were affected in Melbourne and Geelong, with 1,100 intersections losing lights. VicRoads traffic control centre lost visibility of sections of the system as 40% of its regional computers shut down. Police were deployed to assist with traffic management. Rail boom gates without supply went to 'fail safe' mode, further affecting road traffic.
  • Metropolitan train services were disrupted when supply was lost to six major traction substations; 160 trains were cancelled and 616 trains delayed, many with severe overcrowding in high temperature conditions. An estimated 175,000 passengers were affected during peak hour conditions.
  • Metropolitan tram services kept running despite losing 25% of their supply substations. Trams were affected by low supply voltages on their overhead DC network, but the affect of this on trams was masked by road traffic congestion which produced lengthy delays and severe overcrowding in the peak hour conditions.
  • Hospitals and health facilities in blacked out areas reverted to their back-up supply systems to maintain core services. Four hospitals experienced problems – Dandenong, Western (Footscray), Geelong and Bendigo. Problems with back-up power at Geelong Hospital persisted and patient transfer processes were underway when supplies were
  • Mobile phone services were affected. A total of around 140 base stations failed in areas affected by supply interruptions, shutting down in the order of 750 square kilometres of coverage area in metropolitan and country areas.
  • Internet connection services were affected. At least 25,000 users of broadband services (the actual number is likely to be much higher) and hundreds of high speed data services were affected.
  • Airports were largely unaffected. They either did not lose supply (e.g. Tullamarine) or were able to maintain normal services on back-up supply arrangements.

The above results show that back-up supplies for many public infrastructure services failed when put to a real test, while others worked well.

Direct effects in customer's premises were also severe:

  • Most small businesses in areas without supply were virtually disabled for the period. Unless they had a back-up power supply, a typical small business in a location without electricity supply lost its EFTPOS, phone, fax, and Internet services, as well as its lighting, refrigeration, air conditioning and ventilation systems.
  • Residential customers generally do not use back-up power and lost use of all electronic devices, including cordless phones and answering machines and Internet modems, as well as lighting, refrigeration and air conditioning. The use of a mobile phone as a backup may or may not have worked, depending on whether the local base station remained in service.

Electricity industry call centres were overloaded and there was significant spill-over call volume to other perceived sources of advice and assistance. Calls to the '000' emergency number were 35% higher than normal.

2.8 Communications

Stakeholders are almost unanimous in stating that communications on the day did not meet their needs:

  • There was no prior warning on the risk to supplies.
  • Clarity on what had happened was not quickly achieved – in particular, who had lost supply and who was still connected.
  • Uncertainty on two key issues - restoration expectations and likely status next day – persisted for many hours.

Defined communications protocols were not followed in a timely manner. NEMMCO has primary responsibility for communications in such circumstances and their first advice to media was relatively late at 5:30 pm and designed for 6:00 pm television news broadcasts, rather than radio which is regarded by most stakeholders as a better channel for emergency communications.

The earliest advice to media was from SP AusNet and many industry stakeholders used these early media reports as the basis for their advice to customers. Possibly because early reports came from the transmission asset owner, some media discussion centred on when the lines would be restored rather than when supplies would be restored. Restoration of the lines to service was relevant to the need for power restrictions the following day, but not immediatelyrelevant to restoration of supply.

Delivery of reliable information to help electricity customers and others make sound decisions is a key tool for mitigating economic and community impacts. This tool was not effectively used on 16 January 2007.

2.9 Issues and opportunities

The review identified a number of issues that offer potential opportunities for improvement and these are listed in Table 7. These issues were considered in workshops with relevant stakeholders to develop recommendations to reduce the risk and impact of future events.

Fires and power lines
1 Strategic relationships between the fire management industry and the electricity industry Senior level liaison and guidance to support operations staff in both industries during major system events
2 Information on the value of electricity assets relative to other assets Information to support assessment of risk and options analysis in local fire management control centres
3 Transmission line operation in bushfires to preserve electricity supply and safety for fire crews Early safe restoration of lines to service to reduce risk of major system disturbance and load shedding
4 Electricity industry access to fire areas to assess assets for restoration Early confirmation of asset condition to allow restoration of lines to normal service after de-energisation
Communications and information management
5 Information management to meet stakeholder needs Information on status of supply – who is on, who is off – to guide mitigation action and emergency management
6 Timely communication via effective channels Effective early support of management and mitigation decisions by government, industry managers, customers and the public
Market management and supply system design
7 Performance in major supply restoration activity Clear obligations and systems that reflect equity between those in the market and those denied access (supply)
8 Decisions in reclassification of non-credible contingencies as credible Clarity of roles, responsibilities and procedures to improve decision making and accountability
9 Protection of key infrastructure in load shedding Guidance to all customer segments and improvement of load shedding and restoration arrangements in Victoria

Nous believes a key long term issue is:When large areas are without electricity supply, how can market operation best deliver economic value to those involuntarily locked out of the market (i.e. without supply) commensurate with the value delivered to those still in the market? Nous was struck by the apparent disparity between the $500 million economic loss (strongly influenced by supply restoration, an activity for which the NER contain no obligations on any party) and the $70 million estimated aggregate exposure of market participants in the event, which is the focus of the majority of the NER. Nous concluded there is a long term opportunity to amend the National Electricity Rules to reflect a better balance of interests and improve market management systems to deliver market outcomes to support faster supply restoration in future incidents.

2.10 Recommendations

Nous's recommendations are summarised in Table 8:

No. Recommendation Summary of actions Leader
1 Better inform all relevant parties of the
criticality of transmission lines threatened by bushfires and strengthen strategic liaison between the fire management and electricity
industries at senior and government levels.
Produce maps that indicate the likely range of criticality of transmission lines by season and time of day. Set up formal structured information exchange to support options analysis by fire incident control centres in their 'next day' planning. Establish processes to strengthen strategic liaison between senior managers in the electricity and fire industries and between the government agencies that are responsible for them. SP AusNet
(with VENCorp,
2 Review operating procedures for reenergisation of transmission lines tripped by bushfires to assess the benefits of changes in current practices. Assessment of research into the science of high voltage arcs caused by fire, to identify sound science to resolve important divergences in the electricity industry. Joint review and redesign of safe transmission line operating procedures based on this improved knowledge. An interim review to identify any minor opportunities for early improvements that can be implemented in 2007. SP AusNet
(with CFA,
Energy Safe
3 Develop joint CFA/DSE/SP AusNet procedures to ensure the earliest possible easement patrol when required to restore lines to service. Review and strengthen current joint procedures to ensure electricity transmission assets can be inspected
at the earliest possible stage after a fire has passed under them.
SP AusNet and
CFA jointly (with
4 Implement the new protocols and processes identified in the April 2007 NEMMCO paper titled Communications protocol and process
relating to major system events that result in widespread load shedding.
Implement the new communications protocols initially developed by the Victorian Communications Committee after the events, and which are now being finalised by NEMMCO as a national standard. This includes a new senior management 'notification group' including government and emergency service representatives to share information in major load shedding events. It also includes improved government control over public statements by the industry should power restrictions be contemplated. NEMMCO (with
VENCorp, and
Committee in
5 Review with network service providers, the feasibility of fast provision of consolidated customer status following an incident (e.g. a state wide map showing areas off supply) to
government, emergency services and other industry stakeholders.
Review options for rapid production of maps following an incident showing who has lost supply to aid government decisions, and support mitigation activity by industry stakeholders and emergency services. VENCorp with
SP AusNet and
6 Assess options for faster delivery of
information to emergency services, typically within minutes of an incident.
Review options and develop procedures to address the need for emergency services to have the fastest possible access to information when major events occur. VENCorp (with
Victoria Police)
7 Review and improve decision making procedures for reclassification of non-credible contingencies as credible. Develop a simple structured risk analysis framework to ensure all relevant data is taken into account in reclassification decisions related to bushfires. Review and redevelop procedures to improve clarity, especially for non-NEMMCO activities in such decisions. Identify and use authoritative data sources. Implement systems to record all conversations involved for later analysis and learning. NEMMCO (with
SP AusNet and
8 Modify the NER to support improved decision making on reclassification of non-credible contingencies as credible. Clarify the meaning of the word "advise" in Rule 4.8.1 as it applies to major contingency events and include clarification of the roles and responsibilities of parties other than NEMMCO. Modify Rule 4.2.3(f) to oblige NEMMCO to make a decision and publish the result when advised of heightened risk and to seek the most
authoritative sources of information in forming its reasonable opinion.
DPI through the
NEM rule
change process
9 Modify the NER to include a specific obligation on NEMMCO to promptly restore supply to all
loads that have been shed in major system incidents and establish effective accountability for its performance in meeting this obligation.
Modification of the NER to oblige NEMMCO to restore supply to all shed load as quickly as possible, limited only by the restoration and preservation of system security. Include in the NER the obligation for NEMMCO
to report on its performance in meeting this obligation following each incident of major load shedding.
DPI through the
NEM rule
change process
10 Establish distribution network business procedures to achieve early restoration of
supply to key public infrastructure, especially
public transport.
Extend current emergency procedures to include processes to quickly scan the status of supply to key public infrastructure providers, including hospitals and public transport, and restore supply where necessary using substitution of supply from less critical loads. VENCorp
through the
11 Provide guidance to all customer segments
and key infrastructure owners on options for
back-up supply for key loads.
Work with federal and Victorian government agencies to develop and deliver guidance to owners of public infrastructure, small business and residential customers, to support them in their responsibility to have appropriate business continuity plans commensurate with the criticality of supply to their operations, recognising that electricity supply can never be 100% reliable. DPI through
12 Investigate options for improvement of load
shedding and restoration arrangements to reflect critical infrastructure priorities.
Review Victoria's load shedding arrangements to identify any improvements to better protect critical infrastructure and explore longer term options to improve load shedding discrimination and granularity where the cost can be justified by the available Value of Customer Reliability benefits. VENCorp with
the Demand

In addition the recommendations of NEMMCO's system event report and market event report related to the 16 January 2007 incident are supported as valuable contributions to reducing the risk and impact of future similar events. Nous believes its recommendations set out in this report align with, and build on the recommendations in the NEMMCO documents.

[1] Reports published June 2007 and available on

[2] Basslink was restricted to 20% below normal rating due to plant problems earlier that day.

[3] Instructions are issued to produce results that accord with normal market operation rules. Directions can be any action required
for system security and can attract claims for compensation.

[4] The AER compliance review will examine this issue much more closely.

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