We consider applying trend assessment to specific vegetation management activities is useful, given their predictable and recurrent nature. Trending forward actual data on specific activities will provide us with a better understanding of the reasonableness of NSPs' forecasts. Benchmarking costs at the activity level will indicate the relative efficiency of the NSP in conducting vegetation management works. This will be useful in addition to trend assessment because it will indicate the NSPs' historical efficiencies, and it will allow us to adjust a NSP's revenue allowance accordingly. We intend to benchmark a number of activities on a per kilometre of line basis. We consider this is an effective comparative measure because a per unit comparison—specifically, a per kilometre measure—will be simple to calculate. Such benchmarks are expected to form a solid basis for comparing like activities and various cost differences between NSPs, and hence will help us understand NSPs' individual operating environments. The geographical disaggregation (urban/rural for DNSPs; forest, grassland, etc. for TNSPs) is expected to reflect discrete sections of NSPs' networks where costs are affected by different geographical characteristics. The urban/rural disaggregation for DNSPs is already a commonly used measure for a variety of activities. Disaggregation by forest, grassland, and other measures is expected to be the most reasonable disaggregation that can be applied for transmission networks. If they do so already, NSPs should also classify expenditure and quantitative measures according to 'zones'. Classification by zone is intended to broadly reflect material differences in the type and growth rates of vegetation as well as legal obligations that do not affect the network uniformly. This is expected to be the case only for NSPs operating over larger geographic areas. Tree trimming data requirements Data on the number of trees trimmed will be examined with the overall cost of tree trimming by zone to determine the cost per tree cut. Tree trimming is a significant part of vegetation management expenditure; therefore we consider it important to examine the unit cost of performing this activity. We also consider ground clearance costs and easement clearance costs are material and should be examined on a unit cost basis. We considered recording data on spans cleared and separating works on hazard trees. Ofgem records tree trimming/removal work by the number of spans affected, irrespective of the number of trees per span. We consider this would not be an ideal measure in Australia given the wide discrepancy in span length across
We consider applying trend assessment to specific vegetation management activities is useful, given their predictable and recurrent nature. Trending forward actual data on specific activities will provide us with a better understanding of the reasonableness of NSPs' forecasts. Benchmarking costs at the activity level will indicate the relative efficiency of the NSP in conducting vegetation management works. This will be useful in addition to trend assessment because it will indicate the NSPs' historical efficiencies, and it will allow us to adjust a NSP's revenue allowance accordingly. We intend to benchmark a number of activities on a per kilometre of line basis. We consider this is an effective comparative measure because a per unit comparison—specifically, a per kilometre measure—will be simple to calculate. Such benchmarks are expected to form a solid basis for comparing like activities and various cost differences between NSPs, and hence will help us understand NSPs' individual operating environments. The geographical disaggregation (urban/rural for DNSPs; forest, grassland, etc. for TNSPs) is expected to reflect discrete sections of NSPs' networks where costs are affected by different geographical characteristics. The urban/rural disaggregation for DNSPs is already a commonly used measure for a variety of activities. Disaggregation by forest, grassland, and other measures is expected to be the most reasonable disaggregation that can be applied for transmission networks. If they do so already, NSPs should also classify expenditure and quantitative measures according to 'zones'. Classification by zone is intended to broadly reflect material differences in the type and growth rates of vegetation as well as legal obligations that do not affect the network uniformly. This is expected to be the case only for NSPs operating over larger geographic areas. Tree trimming data requirements Data on the number of trees trimmed will be examined with the overall cost of tree trimming by zone to determine the cost per tree cut. Tree trimming is a significant part of vegetation management expenditure; therefore we consider it important to examine the unit cost of performing this activity. We also consider ground clearance costs and easement clearance costs are material and should be examined on a unit cost basis. We considered recording data on spans cleared and separating works on hazard trees. Ofgem records tree trimming/removal work by the number of spans affected, irrespective of the number of trees per span. We consider this would not be an ideal measure in Australia given the wide discrepancy in span length across
AER%20Explanatory%20statement%20-%20draft%20expenditure%20forecast%20assessment%20guideline%20-%20August%202013.DOCX