AEIC The Business Plan 2010

BUSINESS PLAN 2017 – 2020
1
CHAIRMAN’S STATEMENT
It is my pleasure to present TPL’s Business Plan for the 2017-2020 period.
The objective of this Business Plan is to achieve the Government’s core purpose to
“reduce Tonga’s vulnerability to oil price shocks by increasingly accessing to state-of-
the art energy technologies in an affordable and environmentally sustainable manner”.
In order to achieve this objective, Tonga Power must reduce its reliance on Diesel
Generation and introduce a higher proportion of Renewable Energy (RE) generation.
Over the past three years, TPL has achieved approx. 8% of all electricity generation from
RE leaving 82% of electricity generation from diesel generation. Our objective is to
further reduce electricity generation from our diesel engines to 50% by 2020, which is
the target set by the Government. In order to achieve this objective, TPL will require
15.3MW (8.7MW of Solar and 6.6MW of Wind) in new RE generation and at least 20MWh
of storage capacity installed and commissioned by 2020. It has been estimated that up
to 20 seniti/kWh electricity tariff reduction could be achieved from reaching a 50% RE
penetration target. In addition, there will be reductions in carbon emissions from
displaced diesel generation.
Achieving this target however, is not an easy task. TPL will need to raise about $166
million to fund these projects. Funds will need to be raised either from Development
Partners, Institutional lenders or by some other means. TPL will require strong
Government cooperation and support to meet the objectives outlined in this Business
Plan and I look forward to working in partnership with our Shareholder, the Minister of
Public Enterprises together with the Minister of Energy and the Minister of Finance.
In addition to the above RE projects which will be externally funded, TPL will contribute
a further $32 million from its own balance sheet to fund various Network Upgrades, IT,
Power Generation, and ERP projects during the 2017-2020 period.
The objectives and strategies laid out in this Business Plan have taken the Board of
Directors and TPL management considerable time, effort and thought in their
preparation in order to develop a workable and achievable plan that I and my fellow
Directors fully support through to its implementation.
Over the coming few years, the business operations of TPL will become even more lean
and efficient, especially through the implementation of our new ERP software which will
be fully operational by the end of this year. TPL will adopt a proactive service oriented
approach and focus on reducing waste and duplication and delivering our shareholder’s
vision of a lower electricity tariff derived from efficiency gains through the introduction
of more cleaner, greener Renewable Energy generation.
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TPL is also committed to the Utility Reform Project now under way. From creating the
atmosphere conducive to growth, TPL is able to facilitate common meter reading, it
already had in place the infrastructure for common billing, putting in place “One Stop
Shop” for customer payment and feedback more convenience for customers. The
2015/2016 will see us built a common utility office building at Tufumahina. This
highlight the wiliness of TPL to share its services from IT to HR and Fleet Repairs.
Last but not the least, I am quite glad with how Tonga Gas/Home Gas have operated
through the years. The company for the first time presented a $200,000 dividend to
Tonga Power last year and is looking at expanding its core businesses and expansion to
other businesses. This will see an improvement in profitability by about $0.5 million
next year and continue throughout the years.
I would like to take this opportunity to thank our CEO, Mr. Robert Matthews who has
made a big impact and contribution in shaping the future direction across all aspects of
the business operations. These major developments are designed to ensure TPL
achieves a similar corporate governance framework and best practice operations
similar to any utility company across New Zealand, Australia and the Pacific.
Furthermore, I specifically thank TPL management team for their significant effort in
preparing this Business Plan. There are exciting but challenging times ahead for all TPL
staff, but together we are committed to achieving the objectives and strategies of this
Business Plan.
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CEO’S STATEMENT
Once again, it is a great privilege and honor to present Tonga Power Limited Business Plan for
the period 2017-2020. This is the second Business Plan prepared and presented to TPL
stakeholders under my Management.
The main objective of this plan is to deliver the Government’s 50% Renewable Energy target by
2020. Tonga Power intend to invest more than $166 million on various Renewable Energy (RE)
plants over the next four years. However, due to the intermittent nature of these projects, the
integration of renewables into our conventional diesel engines requires careful planning to
ensure the balance between electricity production and demand is properly managed and
maintained. The integration of further intermittent RE into our existing generation mix will need
to be carefully engineered. This is particularly the case when expanding our current Micro-grid
control system and Li-Ion capacitor capabilities and planed Energy Storage projects in the
future.
Further, our distribution grid has been designed and built to operate with centralized
generation. With limited capacity for alternative power flows and without control and
communication at the point of use, our distribution grid cannot realise the full potential of
increasing penetration of renewable generation. TPL intend to use a variety of technologies to
solve the issues arising from intermittent renewable generation. For example, approximately
$25 million will be allocated to “Enabling Power Systems” (EPS) projects consisting bulk energy
storage, SCADA upgrades and demand side management to assist in accommodating RE
generation in order to achieve the balance between electricity supply and demand. A further $2
million EPS project consisting a meshed-ring-communication philosophy, a fourth feeder and a
new Vaini submarine cable will assist in accommodating RE generation into the existing Grid
successfully. We also intend to move to “Smart-Grid” technology in the very near future to
provide communication between generation plants and our network equipment. TPL has
already commenced the first phase of the smart-grid program; with a $4 million project to
rollout smart meters at our customer premises in order to achieve fast and automated response
in load management, energy loss reduction, system stability, and enhanced power quality and
reliability.
In addition, Tonga Power will continue to successfully manage its major ongoing projects such
as TVNUP (Tonga Village Network Upgrade Project), Smart Metering, OIREP (Outer Island
Renewable Energy Project) and ERP (Enterprise Resource Planning) projects during the
planning period.
The Business Plan clearly describes how Tonga Power Limited will achieve the 50% renewable
energy by 2020 with the following portfolio of projects costing about $252 million:
 Priority projects essential to achieve 50% RE penetration target in the future ($166 million
to be funded by Development Partners).
 Projects that are already in progress ($67 million funded by both TPL and Development
Partners).
 Projects that have been committed to and will be completed in the near future ($20 million).
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I am confident that Tonga Power Limited can successfully complete all the projects highlighted
in the Business Plan by 2020 in order to provide safe, reliable, sustainable and affordable
electricity to the people of Tonga.
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Table of Contents
CHAIRMAN’S STATEMENT ................................................................................................................. 2
CEO’S STATEMENT ................................................................................................................................ 4
1. EXECUTIVE SUMMARY ............................................................................................................... 8
2. INTRODUCTION...........................................................................................................................12
3. OVERVIEW OF THE BUSINESS ..............................................................................................14
4. POLICIES AND GUIDELINES GOVERNING THE DEVELOPMENT OF THE BUSINESS
PLAN ..........................................................................................................................................................22
4.1 Ownership Guidelines ........................................................................................................ 22
4.2 Obligations under the NSDF ............................................................................................ 23
4.3 Boards expectations ........................................................................................................... 23
4.4 Energy Policy, Law and Legislation .............................................................................. 24
4.5 Purpose of the Public Enterprise ................................................................................... 27
5. PLANNING INPUTS .....................................................................................................................28
5.1 External Elements ............................................................................................................... 28
5.2 Internal Elements ................................................................................................................ 36
5.3 Summary and SWOT analysis ......................................................................................... 43
6. PLANNING PERIOD STRATEGIC OBJECTIVES & CHALLANGES ...............................45
6.1 Strategic Objective 1 ........................................................................................................... 46
7. STRATEGIES/ACTIONS TO SATISFY OBJECTIVES .........................................................53
7.1 Priority Projects ........................................................................................................................ 53
7.2 Projects In-Progress ................................................................................................................ 58
7.3 Future Project Committed by TPL ..................................................................................... 61
8. PERFORMANCE MEASURES & TARGETS ..........................................................................65
9. STATEMENT OF COMPLIANCE(S)........................................................................................66
10. FINANCIAL FORECAST ..........................................................................................................69
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1. EXECUTIVE SUMMARY
TPL’s vision is to provide safe, reliable, sustainable and affordable service to the people of Tonga.
The vision is developed from the Government’s core purpose for energy which is to:
“Reduce Tonga’s vulnerability to oil price shocks, and achieve an increase in quality
access to modern energy services in an environmentally sustainable manner”.
Thus TPL’s mission is to deliver the nation’s core purpose through this Business Plan and to
remain financially sustainable. TPL’s mission is also in line with the Ministry of Public
Enterprise’s objective “to be profitable and efficient”.
The Business Plan 2017-2020 was developed systematically and constructively to achieve TPL’s
vision and the government’s core purpose through achieving the following six key strategic
objectives.
i. Achieving 50% electricity generation from RE generation by 2020 in order to achieve the
government TERM objective and significant tariff reductions.
ii. Adopting technologies to manage the complexities arising from the increasing levels of RE
penetration.
iii. Improving the network and replacing ageing assets to improve safety and reliability of
TPL's services.
iv. Cultivating a hazard free safety culture to minimize any electrical hazards to both the
public and staff.
v. Investing in leading business processes and systems to improve operational efficiency and
quality of TPL's services to customers.
vi. Managing all external funding and internal financing sources successfully in order to
maximise the shareholder value.
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The following table shows the key challenges that TPL will face in achieving the six key strategic
objectives and their link to the vision:
Strategic Objectives & Challenges for the Planning Period 2017 -2020
ID Strategic Objective Benefits Link to Vision Key Challenges
Achieving 50% electricity generation from Seeking funding for selected projects, building
RE sources by 2020 in order to achieve the Tariff reduction, Increase Affordability, relationships with donors, slow progress rate,
1
government and TERM objective as well as economic efficiency and growth Sustainability managing power purchase agreement with IPP
significant tariff reductions. owners.
Very expensive to implement smart-grid
Adopting technologies to manage the technology, may difficult to seek funding for asset
Enhance grid stability, security, Safety, Reliability,
2 complexities arising from increasing RE improvement/replacement, immature energy
safety and reliability of supply Sustainability
penetration. storage technologies, develop/update asset
management plans.
Improving the network and replacing Improve power quality, line Safety, Reliability, Seeking funding for selected projects; update
3 ageing assets to improve safety and losses, and reliability of supply Sustainability, asset management plans, compliance with ECC
reliability of TPL's services. (or N-1 security) Affordability standards, human resource availability.
Cultivating a hazard free safety culture to Reduce number of hazards,

Regulation promulgation takes considerable
4 minimize any electrical hazards to both incidents, accidents and near Safety
amount of time, HSE structure requires clarity.
public and staff. misses
Reduce non-value added,

Investing in excellent business processes Key staff constraints leading to outsourcing,
increase quality of service,
and systems in order to improve minimising very high consultation costs,
5 reduction in customer Sustainability
operational efficiency and quality of TPL's compliance with overburden policies and
complaints, increase
services to customers. procedures.
employee/customer satisfaction
Managing all external funding and internal Seeking free or low cost funding, lack of clear
financing sources successfully in order to Cost reduction, increase profit, policies on hedging, self/group interest on
Affordability,
6 maximise the shareholder wealth for the tariff reduction through implementing wrong projects, possible
Sustainability
best interest of the company and the investing on right projects government tariff freeze, unfavourable economic
people of Tonga. activities.
The above six strategic objectives are translated into a set of strategic measures. These measures
track the performance of each strategic objectives throughout the four year planning period. A
summary of the performance measures are shown in the table below:
Strategic Performance Targets for the Planning Period 2017 -2020

Current Targets
ID Strategic Objective Strategic Measures Business Unit
2016 2017 2018 2019 2020
Achieving 50% electricity generation from RE Accumulated Fuel Displacement (%) Generation 12% 20% 30% 40% 50%
generation by 2020 in order to achieve the
1 Tariff Reduction (%) due to RE Generation 4% 5% 8% 10% 12%
government TERM objective and significant
tariff reductions. RE Penetration (%) Generation 15% 25% 40% 50% 60%
Adopting technologies to manage the
2 complexities arising from increasing RE Voltage Fluctuations Distribution +/-10% +/-10% +/-10% +/-10% +/-10%
penetration.
System Loss (%) Distribution 11.0% 10.5% 10.0% 9.0% 9.0%
Improving the network and replacing ageing Fuel Efficiency (kWh/L) Generation 4.0 4.0 4.0 4.0 4.0
3 assets to improve safety and reliability of TPL's Distribution &
services. Reliability (SAIDI) (Minutes) 1000 950 925 900 850
Generation
N-1 Security Policy Compliance Generation 100% 100% 100% 100% 100%
Cultivating a hazard free safety culture to
4 minimize any electrical hazards to both public Loss Time Injuries Corporate 0 0 0 0 0
and staff.
Investing in excellent business processes and Staff Retention (%) Corporate > 90% > 90% > 90% > 90% > 90%
systems in order to improve operational
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efficiency and quality of TPL's services to Customer Complaints Corporate 50 40 30 30 20
customers.
Managing all external funding and internal NPAT Retail $4.0M $4.0M $4.0M $4.5M $4.5M
6 financing sources successfully in order to
maximise the shareholder value. ROE Retail 10% 10% 10% 10% 10%
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Actual performance will be monitored against these targets on a regular basis. The results of the
performance review will be used to review the current strategy and develop new strategic
objectives and revise the performance measures for the next financial year.
The current state of performance are the values shown in 2016 (where we are now) and the
targets will be the future states of performance for each year from 2017-2020 (where we want
to be). The projects mentioned below and strategies will have to be implemented to achieve the
future states of performance (how do we get there).
In order to achieve the future target performance, TPL plans to invest $252 million on capital
projects (i.e. Capex) as shown below.
 Priority projects essential to achieve 50% RE penetration target in the future ($166 million).
 Projects that are already in progress ($67 million).
 Projects that are committed by TPL to complete in the future ($20 million).
These strategic projects are highlighted in the following tables.
High Priority Projects Achieivng 50% RE Target

50% Est. Cost Tariff Impact
ID Project 2016-2020 Notes
Target (T$) (s/kWh)
Demand Side Efficient lighting, MEPS, replace old appliances, water
1 Management and EE 4.0m 3 heater controls, energy audits, tax changes, peak load
Energy Efficiency awareness, TOU or demand based tariffs .
Upgrade of Nuku’alofa network to reduce line losses and
Nuku’alofa Network
improve reliability of the network further enabling RE. Full
2 Upgrade Project EE 50m 2
roll out of smart metering should be undertaken at this
(NNUP)
stage.
Allows 20% RE penetration, essential for Wind Generation

Enabling Power System in the East, partially funded by the World Bank (T$ 1.0m).
3 EPS 2.0m TBD
(EPS) Project A Submarine cable replacement is outstanding including
meshed ring philosophy and fourth feeder
Tariff impact assumes donor funded investment and 5%

1.3 MW Solar PV
4 0.17 6.0m 2 into a sinking fund to replace assets. IPP being sought for
(Central TBU)
project.
2.2 MW Wind Farm
5 0.26 20m 5.5 into a sinking fund to replace assets. NZ MFAT studying
(Niutoua)
project. A new tariff should be initiated at this stage.
Allows 35% RE penetration, includes approx. 2 MWh of
energy storage (potentially to existing RE generation
6 EPS Project B EPS 5.0m TBD
schemes), SCADA upgrades, existing generation fine
tuning, capacitor banks. CBs and comms.
2.2 MW Wind Farm
7 0.35 20 m 3 into a sinking fund to replace assets. Japan studying
Extension (Niutoua)
project.
Allows 50% RE penetration, EXCLUDES energy storage,
8 EPS Project C EPS 2.0m TBD
includes capacitor banks. CBs and comms
3 x 1.3 MW Solar PV
9 0.41 18m 3 Tariff impact assumes donor funded investment
(Central-West)
2.2 MW Wind Farm
10 0.52 20m 2.5 Tariff impact assumes donor funded investment
Extension (Niutoua)
Energy Storage (8 to 16 Required to prevent renewable energy spill from
11 0.61 19m TBD
MWh) exceeding 20%.
Total= 61% 166m 21 s/kWh
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Projects In Progress
50% Est. Cost Funding
Target (T$) Source
Smart & Prepay Metering

1 EPS 4.0m TPL & MFAT Installation of 3000 smart/prepay meters in Tongatapu.
Stage 1

Tonga Village Upgrade improve reliability of the network further enabling RE. Full
2 EE 42.0m MFAT & TPL
Projects Phase 2/3 roll out of smart metering should be undertaken at this
stage.
3 Tonga Police Solar Project 10% 2.5m DFAT Installation of 250KW PV plus 100kWh storage system.
Outer Islands Renewable Project cosists of both establising RE plants (550KW in

4 Energy & Energy Efficiency 14% 16.0m ADB Ha'apai and 200KW in Eua) and upgrading of distribution
Project networks.
IT Virtual Environment & Virtual server development to provide high availability,

5 EPS 0.5m TPL
Disaster Recovery Project disaster recovery and data protection.
The system will provide improved governance, the ability

Enterprise Resource
6 EPS 2.0m TPL to cope with growth and diversification and facilitate cost
Planning Project
reductions.
Total= 14% 67m
Future Projects Committed by TPL

Target (T$) Source
Generator Replacement Replacing or overhauling all CAT and Cummins generators

1 EPS 9.0m TPL
Program (All Islands) in Tongatapu and Outer Islands
Outer Islands Network

2 Upgrade Program (Vavau EPS 3.0m TPL Network upgrade work left over from OIREP project.
& Eua)
Tongatapu Village Network upgrade work (about 5 more villages) left over
3 EPS 3.0m TPL
Network Upgrade - Stage 4 from TVNUP and Nuku'alofa Ntwork Upgrade Projects .
Smart Metering Project - Installation of balance $14,000 smart meters in

4 EPS 3.0m TPL
Stage 2 Tongatapu.
Other inciliary generation projects including SCADA
5 Generation (Other) EPS 2.0m upgrade, fire hydrants, G8 day tank, MAK/G8 load sharing
module, waste oil disposal system etc.
Total= Nil 20m
The implementation of the strategies outlined in this plan will be instigated at a ‘fast pace’. The
Business Plan will be updated annually, outlining how each area will be developed to produce
decisive results both in the immediate to short term and over the full four years of this Business
Plan.
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2. INTRODUCTION
The Business Plan 2017-2020 complies with the requirements of the new template provided by
the Ministry of Public Enterprises and details TPL’s planned journey for the next four years to
achieve its vision and deliver on the Government’s core purpose.
The key purpose of this Business Plan is to provide TPL staff with a clear direction and to keep
the public and other stakeholders well informed about our objectives and to allow our
shareholding ministry the opportunity to provide input into our strategic objectives. The plan is
a systematic, structured and comprehensive document. It is a key part of our strategic
development and highlights the challenges and opportunities the business faces and describes
how we intend to monitor our performance against this plan.
The major focus in this year’s Business Plan is fulfilling TPL’s commitment to Government’s 50%
RE target in order to achieve the following benefits:
 Reduced electricity tariff due to reduction of fuel use in the conventional generation.
 Improved efficiency and reduced system losses when generation is connected near the
load.
 Reduced need for bulk diesel generation from a centralized location.
 Sustainable and environmentally friendly energy sources resulting in low carbon
emissions.
 Improved power quality and reliability in the long run due to establishment of central
and distributed control systems that will allow an effective interaction of supply and
demand.
 Voltage and reactive power control capabilities from inverters.
 New Renewable Energy generation projects funded through Independent Power
Producers.
Multiple Renewable Energy (RE) sources at dispersed locations in Tonga requires a significant
change in the protection and control methodologies compared to the single generation plant in
Popua. The standard radial protection and relay approach will no longer be appropriate. Future
generating sources must communicate with each other in a manner that ensures adequate
system stability, proper frequency and voltage control, and optimal system performance in
terms of efficiency and cost of energy production.
In the future, energy generation and distribution in Tonga will be much more automated and
ready to interact with distributed RE resources. Distribution automation and smart grids will
apply to all the following elements of the distribution system:
 Customers (meters and loads)

 Intelligent load-control devices on the distribution system
 Distributed RE generation and storage systems, including local energy control systems
 Intelligent switches, breakers and re-closers
 Communication and data management devices
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The transition to active distributed RE systems and a distribution system that is ready for
integration of these systems cannot be achieved abruptly. As explained in this Business Plan,
considerable time, skill, knowledge and resource is required to fully integrate the proposed
distributed RE (predominantly solar and wind) systems with diesel generation to enhance
power quality and reliability through automation and control.
This Business Plan is a combination of TPLs strategic and operational plans. Strategically, it sets
out TPL’s current and future unique strategies for all business units including Generation,
Distribution, Retail and Corporate Compliance in line with the long term goal of achieving TPL’s
vision. Operationally, project planning and implementation issues are discussed in order to
provide the reader with an in-depth understanding of TPL’s business activities and issues for
the planning period.
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3. OVERVIEW OF THE BUSINESS
Tonga’s electricity sector was re-structured in 2008 when the Government established the
Electricity Commission (EC) through the Electricity Act 2007, and purchased the electricity
assets from a privately owned entity. The functions of the EC include the regulation of tariffs,
establishing consumer service standards, managing electrical safety, as well as the licensing of
electricians, and creation of regulations for major electrical works. TPL operates under a strict
regulatory framework through the Electricity Concession Contract (ECC) in which tariffs, tariff
adjustment formulas, operational efficiency benchmarks, consumer service standards and
penalties are specified between the EC, the Government and Tonga Power Limited. TPL has its
own Company Constitution and also operates under the Public Enterprises Act 2010 which
provides greater commercialization incentives for state owned corporate entities.
TPL has been established with an independent Board of Directors drawn from the commercial
sector of Tonga. TPL’s major objectives are to:
 Provide a safe, reliable, affordable and sustainable electricity supply throughout Tonga.
 Maximize shareholder value while maintaining prudent levels of exposure to operational
and financial risks.
The electricity sector in Tonga is characterized by the existence of a single vertically integrated
electricity utility. Tonga Power’s core business is generating, distributing and retailing electric
power across our four-grid system within Tonga consisting of more than 21,000 customers. A
complementary business is the provision of infrastructure services such as electrical lines
services within Tonga. Tonga Power recently diversified into LPG supply and distribution
businesses with the acquisition of Tonga Gas and Homegas.
TPL activities are outlined below:
Generation Capacities: As of March, 2016, TPL had installed firm (diesel) generating capacity
of 17.2MW in all four islands as shown in the table below. Tongatapu capacity and its peak
demand is about 13.8MW and 8.4MW respectively. Tongatapu is well served from the Popua
Power Station where there is sufficient capacity to meet current peak demand even with one of
the diesel units out of service (N-1 reliability). Vava’u also meets the N-1 security with a total of
five generators. In Vava’u, two new 600 kW Cummins units are supported by smaller units
(2x186 kW + 320kW units). Ha’apai has 320kW + 2x186kW unit also provides N-1 security. Two
186 kW Cummins units + 420kW hired unit installed in ‘Eua. The peak demand at ‘Eua is such
that for a relatively small number of hours, both Cummins generators need to be operational to
meet the peak demand.
A new 11kV switchboard was installed at the Popua Power Station early this year to provide
flexibility and reliability of supply.
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Quick Facts as at March, 2016
Generation Distribution Customers
Tongatapu
Equipment Distribution standard Domestic - 12,277
Two 2.67 MW Leroy Somer 11 kV HV network. The LV ¹Commercial - 3,037
alternators coupled with 2.88 MW Cat network operates at a Electricity tariff -
6CM32C engines. Six 1.4 MW three/single phase standard of s/kWh3
Caterpillar 3516B diesel engines 415/240V. Fuel 25.64
driving 11 kV Kato/Cat alternators. Lines Non-fuel 44.35
Governing done by Woodward DSLC. 187km of HV overhead line, Total 69.99
2 .4 MW solar plants at Vaini and 12km of underground cables,
Popua. New switchgear installed in and 1km of submarine cable.
2016. 452km of LV lines (single and
Capacity three phase).
13.74 MW (Firm) 2.4 MW
(Intermittent)
Staffing
Semi-automated with SCADA
monitoring. Vava’u
Equipment Distribution standard Domestic 2,344
Two 600kW QSK23 Cummins 6.6 kV, three/single phase ¹Commercial 863
generators, One 320 kW K19 standard of 415/240V Electricity tariff - s/kWh
Cummins generator and Two 186 Lines Fuel 25.64
kW LTA10 diesel generators. 68km of HV overhead line, Non-fuel 44.35
Stamford alternators are utilized 2km of underground cables, Total 69.99
with the engines. One centralized and 97km of LV (single and
420kW solar plant. three phase).
Capacity
1.892 MW (Firm) 420 kW
(Intermittent)
Staffing
Semi-automated. Monitored and
controlled locally with SCADA
monitoring.
Ha’apai
Equipment Distribution standard Domestic 757
Two containerised 186 LTA10 kW & 6.6 kV, three/single phase ¹Commercial 211
320 kW K19 diesel generation sets. standard of 415/240V Electricity tariff - s/kWh
Containerised switchgear. Lines Fuel 25.64
Capacity 15km of HV overhead line, 2km of Non-fuel 44.35
0.692 MW (Firm) Under-ground cables, and 32km Total 69.99
Staffing of LV lines (single and three
Semi-automated. Monitored and phase).
controlled locally.
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‘Eua
Equipment Distribution standard Domestic 937
Two containerised 186 kW 6.6 kV, three/single phase ¹Commercial 90
LTA10 & 420kW K19 (hired) standard of 415/240V Electricity tariff - s/kWh
diesel gen sets. Containerised Lines Fuel 25.64
switchgear. 14km of HV overhead line and Non-fuel 44.35
Capacity 42km of LV (single and three Total 69.99
0.792MW phase).
Staffing
Semi-automated. Monitored and
controlled locally.
Distribution Network: Tonga Power operates in four distinctly separate island grids:
 Tongatapu – 11kV distribution network, 190 km of overhead line, 12km of

underground cables, and 1km of submarine cable, in addition to 467 km of low
voltage lines (single and three phase).
 Vava’u – 6.6kV distribution network, 70km of overhead line, 2km of underground
cables, and 97km of low voltage lines (single and three phase).
 Ha’apai – 6.6kV distribution network, 15.5 km of overhead line, 2km of underground
cables, and 38 km of low voltage lines (single and three phase).
 ‘Eua - 6.6kV distribution network, 14km of overhead line and 42km of low voltage
lines (single and three phase).
Across the four grids, low voltage reticulation is at 400/240 volts.
The four grids are exposed to extreme (cyclone, salt spray) weather conditions, primarily from
strong winds that often cause indirect damage due to vegetation. A significant amount of
vegetation management is on-going however the networks are vulnerable to falling coconut
palms. The grids do not feature any sub-transmission circuits or trunk feeders as one would see
in larger and more densely populated areas internationally. This makes all of Tonga Power’s grids
largely radial in nature with little ability to interconnect or mesh the networks to provide multiple
transmission routes to key customers or core areas of service. The only area where there is scope
for interconnection and sectionalising of feeders is in and around Nuku’alofa. Under the
Nuku’alofa Upgrade Project, work is being planned for this financial year to overhaul and repair
network switches to help manage interconnection issues.
Under the Asset Management Plan, TPL has progressively introduced asset condition monitoring
using the following methods in order to enhance reliability of supply and safety.
 Identifying locations of old assets (insulators, transformers, recloses, street light control
boxes, poles and undersized conductors etc.) through the GIS and replacing/maintaining them
as per the maintenance plan.
 Utilising innovative technologies such as Acoustic Inspections on overhead distribution assets
to identify defects such as corrosion, pitting, tree contact, overheating, contamination, cracks,
loose connections, and electrical discharges etc. All of which contribute to network losses and
when rectified will reduce network faults in the field.
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In general, TPL meets the demand for electricity with reasonable and fair quality of power from
its generating stations, but the poor quality networks in some remote villages can create local
supply failure from time to time. The grids are being upgraded for reliability and resilience (with
increased ability to isolate faulted sections) under the following projects:
 New Zealand Government funded (MFAT $42 million and TPL $12 million) Tongatapu
Village Network Upgrade Project (TVNUP) to upgrade 50 villages in Tongatapu.
 ADB funded (ADB $5 million and TPL $1 million) Ha’apai Cyclone Ian Recovery Project.
 ADB funded (ADB 9.2 million and TPL $900 k) Outer Islands Renewable Energy Project –
Grid Rehabilitation.
These initiatives have brought distribution power losses down to about 11.25% as at March, 2016.
Tariff: As 92% of the electricity on the TPL grid is supplied from diesel generation, the price of
diesel fuel is the major component of the electricity tariff. The tariff structure changed in May
2009 through regulation and became known as the “one tariff for all” regulation which makes the
tariff consistent across all the four island groups. The historical tariff movement is shown in the
graph below.
Tonga electricity tariff (currently at 69.99 seniti/kWh) consists of two components: Fuel
Component (25.64 seniti/kWh) and Non-fuel Component (44.35 seniti/kWh). The tariff structure
(i.e. splits) is shown in the figure below. Fuel cost accounts for around 37% of the current
electricity tariff and TPL operating costs account for 63% of the electricity tariff.
16
The Concession Contract requires changes to the fuel component of the tariff based on the cost of
diesel as determined by Government through The Competent Authority. At intervals of three
months (unless a shorter period is agreed), an independently developed pricing model sets the
change of price for this component. The changes are recommended to the Electricity Commission
for approvals in line with the Concession Contract. The non-fuel tariff will be reviewed and
updated on a five yearly basis (also called regulatory period) as per the Concession Contract.
Demand: Tongatapu’s peak load demand is about 8.4MW on average, and the electricity demand
profiles (see the figure below) clearly reflect contributions from the commercial and residential
sectors. In general, there are two (2) electricity peak demands on weekdays, i.e. late morning to
early afternoon peak and then an evening peak. Analysis of the load profile shows that the major
contributors to daytime load are commercial customers (primarily air-conditioning and lighting).
The decrease in commercial sector activities in the afternoon (around 4pm) is replaced by the
increase in the residential sector activities (primarily lighting and cooking) resulting in an evening
peak around 8pm. Unfortunately, solar generation is not able to address this timing of peak load
without adding a substantial storage facility. In general, mid-day peak demands during weekdays
are higher than weekends and the differences are estimated around 15% to 20%. On Sundays,
instantaneous solar penetration levels can reach 20% as requirement for diesel generation
declines due to low demand.
17
Tongatapu Load Profiles
Customers: A recent Population Census in Tonga shows that around 93% of the total households
have access to electricity. Growth in the number of electricity consumers has been less than 0.7%
annually since 2005 until 2012 as all consumers within the reach of the grid have been connected.
However, TPL has seen a 2% growth in the last couple of years due to increase in power use by
residential and commercial customers. As at March, 2016, the total number of customers in all 4
island groups was approx. 22,000. Approximate Electricity consumptions by end-user sectors are
shown in the figure below.
18
Energy Generation, Consumption and Losses: Total generation (diesel plus renewables) on
all four island groups for the year ending June 2015 was about 55.4 GWh. This quantity of
generation was slightly more than the quantity generated in the year ending June 2014 of 54.6
GWh reflecting a growth in the demand for electricity. Out of the total power generated, 49.1
GWh was billed to customers with parasitic and line losses contributing 1.4 GWh and 4.9 GWh
respectively. The overall system losses reduced to 11.26% at end of June 2015.
Generation & Consumption 2010 2011 2012 2013 2014 2015

Generation (kWh) 51,845,271 53,159,568 52,391,468 53,312,873 54,560,742 55,404,581
Billed (kWh) 42,625,211 44,566,226 44,730,599 46,388,331 47,817,820 49,165,194
Total losses (kWh) 9,220,060 8,593,343 7,660,869 6,924,542 6,742,922 6,239,387
System losses (%) 17.78% 16.17% 14.62% 12.99% 12.36% 11.26%
System losses (Target %) 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%
No. of Customers 20,773 20,758 20,498 20,580 20,633 20,932
Renewable Energy: In 2009, the Government of Tonga approved a goal of 50% of electricity to
be generated from renewable energy sources by 2020. Under TERM and with TPL direct
operational input, three major solar plants were constructed: Maama Mai (1.4MW) and Mata ‘o e
La’a (1MW) in Tongatapu and La’a Lahi (420KW) in Vava’u. The Mata ‘o e La’a in Vaini and Maama
Mai in Popua plants are supplied with short-term (60 seconds) energy storage to reduce the
effects of power fluctuations. Vaini and Popua Solar facility incorporates a micro-grid controller,
which automatically optimises the output from a mix of renewable energy and diesel generation
whilst stabilizing the frequency.
Although the 1.4 MW Maama Mai solar farm and the 1 MW Mata ‘o e La’a solar plant add to the
existing generation capacity, the intermittency of the energy source means it cannot be relied on
to provide firm capacity. Hence the solar facilities do not fully alleviate the requirement for
replacement diesel generation capacity in the medium term. The La’a Lahi 500 kW solar facility is
controlled to curtail output when the diesel generator output falls to 30% of capacity. This limits
the solar plant to 440 kW peak output.
In addition, TPL own 65KW roof-top micro solar capacity with 111KW of third-party micro solar
capacity owned by private customers. Total fuel savings from renewable projects from their
inception dates was approximately 2.8 million liters, which is equivalent to $4.4 million in cost
savings passed directly to consumers.
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Financial Strength: TPL’s revenue is generated from our 22,000 customers from all four island
groups with over 85% from Tongatapu.
20
During the past five years there has been a significant increase in generation from 51GWh to
55GWh per annum despite an economic decline along with rising costs. In the year 2015, the
company generated approximately $46 million in revenue with $3.0 million net profit after
tax (NPAT) followed by a $2 million dividend which TPL has paid to the shareholder
Government.
30-Jun-15 2010 2011 2012 2013 2014 2015

Revenue $36,321,524 $40,124,291 $44,038,707 $41,782,742 $48,505,746 $46,100,465
Expenses $31,915,137 $35,172,632 $40,782,045 $38,844,083 $44,991,917 $43,554,963
Profit Before Tax $4,406,387 $4,951,659 $3,256,662 $2,938,659 $3,513,829 $2,545,502
Tax Expense $1,524,510 $1,237,915 $780,314 $713,692 $878,457 $636,376
Net Profit After Tax $2,881,877 $3,713,744 $2,476,348 $2,224,967 $2,635,372 $1,909,126
4. POLICIES AND GUIDELINES GOVERNING THE DEVELOPMENT OF THE BUSINESS PLAN
4.1 Ownership Guidelines
The Letter of Expectation, dated 8 April, 2015, states several guidelines from the Minister for
Public Enterprises as to how the Tonga Power Limited should operate to which TPL strictly
adheres to. The major ownership guidelines include:
 The company should operate as a successful business and, to this end, to be as profitable and
efficient as comparable businesses that are not state owned. In other words by practicing
continuous improvement, profitability of the company is expected to progressively increase
annually as efficiency and productivity increases.
 A great emphasis should be placed on quality of service delivery to the electricity consumers.
From the customer services at the counters to households around the country, electricity
supply services must be people-oriented and customer-friendly.
 All public fees and charges should be clearly justified and explained to all customers through
public media which may include in weekly newspapers.
 Customer complaints and criticisms should be viewed as opportunities to improve
performance and transparency rather than a barrier to development.
 There is an absolute requirement that Tonga Power advises the Ministry of anything of
significance that arises or likely to arise and that has not been previously disclosed in the
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Business Plan or otherwise, particularly if the matter is likely to (i) be commented upon in
the media; (ii) have political significance; or (iii) have a material impact on the performance
of the company or (iv) have a material impact on the customers or other stakeholders.
 The company should prepare and submit to the Ministry a sound Asset Management Plan
(AMP) and a Business Continuity Plan (BCP). These plans should be consistently reviewed
and updated as the situations change.
 The company should develop and maintain a suitable Risk Management Framework. All the
potential risks that the company is exposed to should be identified, assessed, evaluated and
included in a Company Risk Register.
4.2 Obligations under the NSDF
The Government of Tonga has initiated a National Strategic Development Framework (NSDF)
for creating a Tonga where enterprises can flourish, opportunity exists for all, there is
confidence to face the challenges of global society, development builds on Tonga’s strong
cultural traditions and evolution takes place to address a rapidly changing world.
The NSDF aims to improve electricity generation and distribution systems and its safe operation
in order to improve the living standards of all Tongans. The framework highlights a desire to
improve services, accountability, and revenue collection, as well as the coordination of
development partners.
Tonga Power’s major obligations under the NSDF are:
 Maintaining and where possible expand the provision of reliable and cost efficient power
supplies using traditional and renewable options to all communities.
 Strengthening regulatory compliance and safety oversight of the utility sector to ensure
compliance with international safety standards.
 Implementing the proposed priority projects outlined in the NIIP (National Infrastructure
Investment Plan).
 Investing in a healthy, well-educated, skilled and gender equal workforce.
 Enhancing staff development and training to increase the value added to our business.
 Fostering innovation and technological development.
 Maintaining good relations with development partners for mutual partnership, aid
effectiveness and donor harmonization.
 Improving profitability, accountability, and return on equity of our public enterprise.
4.3 Boards expectations
The Board of Directors has a role to control and monitor management and take the reasonable
steps to ensure best practice governance and compliance. The Board also has a strategic and
advisory role, which includes taking steps to ensure proper corporate performance and value
creation. The key is avoiding being dysfunctional between the Board and executive management
and to elevate poor and possibly fatal business decisions, but more importantly to set the stage
for mutual benefit, respect and value creation.
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The Board expectations from TPL are:
 Maximise shareholder value: The Board wants management to invest in value added projects
that maximise shareholder wealth and enhances profitability.
 No surprises or spin: There should not be any surprises for a Board. The CEO and senior
management need to be proactive and advise the Board of the true state of affairs and
without any spin.
 Bad news must reach the board ASAP: The Board needs to be the first to know of problems
when they arise. Management needs to further develop the systems, processes and
incentives within the organization that promote full transparency and reporting, right up to
the Board and its committees.
 Deep expertise in the business: The Board requires expertise across the full management
bench with no gaps.
 Visibility of management thinking: The Board should see proposed strategic options from
management. Management’s thinking and assumptions need to be fully transparent to the
Board, in writing and open to critique.
 Full access to information: Information has five dimensions: quality, quantity, source, format
and timeliness. There should be no information funneling or blockage to any dimension. In
order to do its job, the Board will have reasonable access to TPL information as directed by
the Chairman and ensuring the CEO is notified.
4.4 Energy Policy, Law and Legislation
In recent years there have been several policy and legislative initiatives in Tonga aimed at
improving the legal framework of the electricity sector and the implementation of fossil fuel
(diesel) reduction programs and development of renewable energy projects.
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The Department of Energy of MEIDECC (Ministry of Energy, Information, Disaster Management,
Environment and Climate Change) is mandated to govern the energy strategy in Tonga under
the NSDF (National Strategic Development Framework) policy framework.
In 2008, the Electricity Commission (EC) was established as the regulatory agency for grid-
based diesel generated electricity supply, replacing the former TEPB as the regulator. The EC is
specifically involved in regulating the generation and sale of electrical power. The establishment
of the EC was legally defined by the Electricity Act 2007. The Electricity Act 2007 provides the
governance framework for the electricity sector. It defines the role of the EC in regulating the
generation and sale of electricity and establishes the role of the Concession Contract in
producing and delivering electricity. In addition, the Act provides the Ministry of Finance with
the authority to be a signatory in the Concession Contract between the EC and the
Concessionaire (TPL) and to establish regulations to ensure effective management of the
electricity utility.
TPL is required to operate as a successful business and to be as profitable and efficient under
the Ministry of Public Enterprises Act 2010. The Act also requires TPL to report its performance
on a periodical basis.
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The Renewable Energy Act 2010 also creates a Renewable Energy Authority within the
Department of Energy of MEECCDMMIC to deal with matters concerning RE including both on-
grid and off-grid uses under the Tonga Energy Road Map (TERM) 2010-2020.
TERM 2010-2020 was launched in June 2010. TERM consolidates the priorities highlighted in
the National Infrastructure Investment Plan (NIIP) and National Strategic Planning Framework
(NSDF) and sets out an aggressive set of targets for the electricity sector.
The NIIP outlines the Government of Tonga’s priorities and plans for the major initiatives in the
economic infrastructure sector (energy, telecom, water, waste and transport) over the next 5 to
10 years.
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4.5 Purpose of the Public Enterprise
Govt. Core Purpose

Reduce Tonga’s vulnerability to
oil price shocks, and achieve an
increase in quality access to
modern energy services in an
affordable and environmentally
sustainable manner Key Energy Outcomes:
 National security of
supply of energy
 Economic
development-
Values Imperatives Mission Vision competitive energy
pricing, quality services
 Standard of Living-
making electricity
available at every home
 Low carbon energy
TPL Values TPL Vision
 Value customers, people Safe, Reliable,
and the environment Sustainable and
 Run the business as if it’s Affordable
your own service to the
 Think differently, and people of Tonga
capture the value TPL Mission
 Success as a team,  To deliver the
success as an individual nation’s core purpose
TPL Key Imperatives
 Reputation & transparency via our strategies and
 Best Practice & embracing Business Plan
technology  To be financially
 Low Cost & low price sustainable
 Meeting and Managing
shareholder expectations
 Recognised quality
customer service
TPL’s core purpose is to deliver the Government of Tonga’s vision for the energy sector and to
deliver on the nation’s target for energy via its strategies identified in this Business Plan. GoT
also calls for TPL to be financially sustainable. The values and key imperatives are the foundation
to successfully achieve our Core Purpose. All these elements together achieving the broader
energy outcomes at national level.
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5. PLANNING INPUTS
5.1 External Elements
Legal, Policy & Environmental Issues: The major legal and environmental issues can be
summarised into the following five categories and they are discussed in detail below.
 Aggressive TERM objectives

 Third Party Generation (off-grid)
 Third Party Generation (on-grid)
 Lack of safety regulations
 Tonga’s Climate
Aggressive TERM objectives: In order to reduce the vulnerability of the country to future oil price
shocks, in April 2009, Government together with its development partners embarked on a
process to develop the Tonga Energy Road Map 2010-2020 (TERM). One of the objectives of the
TERM is to achieve 50% of national energy generation through renewable resources by 2012 -
2020. This target is considered aggressive and achievable by Tonga Power but may be hampered
for the following reasons:
 There is a high level of dependence on donor funding for energy projects that result in long
lead times due to the availability of insufficient donated funds to develop selected renewable
projects. To date, although commendable, only 8% of the national energy generation has
been replaced by renewable energy.
 Government’s public debt can make it difficult to obtain Government guarantees. As at
January 2015, government’s public debt estimated at $392 million or 48% of GDP of which
external debt (debt to China and development partners) accounts for $361 million and
domestic debt (government bonds) is $30 million.
 The relative cost of renewable energy tends to be high, particularly initial investment,
although costs are reducing gradually.
The difficulty in obtaining funds from donors and the considerable time taken to implement
donor funded projects forces TPL to look for funds elsewhere. Alternative opportunities
available for TPL is to take on debts at concessional rates or outsourcing power generation to
IPPs.
Third Party Generation (off-grid): The Electricity Act 2007 allows third party or self-energy
generation. In addition, The Renewable Energy Act 2010 allows anyone to generate, store or
distribute renewable energy under a concession agreement with the Renewable Energy
Authority. This imposes a significant revenue risk to TPL.
27
Tonga has a single tariff rate system which is pro-poor in that contributions to fixed costs
varying with volume. Since approximately 80% of the revenue is generated from about 20% of
large customer base (i.e. 80% of the customers are using less than 150kWh in Tonga) large
customers in principle carry a large proportion of TPL’s fixed costs compared to small
customers. Since the Electricity Act 2007 allows self-generation, it is financially viable for large
customers (such as Tonga Police, Digicel, LDS Church, & TCC etc.) to generate their own
electricity with off-grid power facilities (e.g. roof-top solar with a small diesel generator to
supply power when sun is not available). This would eventually lead to significant revenue
reduction for TPL from large customers.
In the same manner, as allowed by The Renewable Act 2010, if any person generates, stores and
distributes renewable energy to some selected customer segment using a mini off-grid system
(outside TPL’s four island grid systems), TPL would lose its existing revenue from this customer
base.
If a significant number of parties continue to generate renewable energy using private owned
or mini off-grid systems in this manner, TPL may have to increase its existing tariff base to cover
its fixed costs.
Third Party Generation (on-grid): On-grid or grid-connected systems are also called Distributed
Generation (small or large) where third parties generate their own electricity and connect to
TPL’s main network to inject surplus electricity or draw more electricity if there is deficit in the
energy requirement. Distributed Generators connect to TPL’s network mainly because they do
not have energy storage facilities for night use.
TPL offers to manage Large Distributed Generation (LDG) through Power Purchase Agreements
(PPA’s) negotiated on a case-by-case basis. Similar to the off-grid third-party generation, the on-
grid distributed generation also brings significant revenue losses to TPL. However, this risk
could be mitigated by constructing a suitable agreement including various mechanisms such as
charging a grid availability charge or setting up a multi tariff system. However, there are other
risks inherent in the distributed generation. They are:
 Loss of grid stability & security of supply: The private investment in renewable electricity
generation of capacity less than 10kW (i.e. SDG or small distributed generation) has impact
on grid stability and security of supply in the medium and long run. The greater the degree
of renewable penetration, the greater the impact on the centralised generation and
distribution assets. This in turn imposes significant financial risks to TPL as it has to invest
large amount of money on technologies such as smart technology which includes smart
meters, storage facilities and micro-grid controllers to avoid grid instability.
 Deterioration of generation assets: Due to the intermittent nature of third-party renewable
generation, TPL should still maintain a large spinning reserve, keeping existing firm (diesel)
generation operating at inefficient levels. This would see TPL incur extra diesel or other fuel
costs and likely an accelerated rate of deterioration of existing diesel and other firm
generators.
 Renewable energy spillage: As more distributed generation are introduced to the network
means that at some stage, TPL’s own renewable generation would become redundant due
28
to surplus energy in the system. This surplus energy will have to be curtailed somehow and
perhaps battery storage will provide a solution moving forward.
 Economic by-pass: As mentioned above, the single tariff system in Tonga is pro-poor. The
larger electricity users do cross-subsidise the smaller customers by carrying larger
proportion of fixed costs. If large customers generate their own power without paying their
contribution to fixed costs, the ability to cross-subsidise the smaller (largely “energy poor”)
customers will be difficult to maintain.
Many people argue that third party on-grid distributed renewable generation is a good thing as
it can achieve the TERM objective faster towards achieving the 50-100% renewable generation
target. However, third party renewable generation may be unsustainable if not properly
managed through a suitable PPA to recover non-fuel revenue loss and other TPL associated
costs. TPL is in the process of implementing a Gross Metering Policy which can recover the non-
fuel revenue that would otherwise have been lost.
Limited safety regulations: Building wiring is not the responsibility of Tonga Power as TPL’s
responsibility is up to the power entry point at the electricity meter only. House wiring is the
responsibility of the Electricity Commission and qualified, licensed Electrical contractors. It is
the responsibility of EC licensed electrical contractors to inspect the house wiring initially
during construction of the building and conduct periodical inspections thereafter. There have
been several deaths in Tonga over recent years due to poor electrical wiring. This reflects badly
on TPL’s reputation and the Electricity Commission not to mention the sector in general.
EC asserts that the old Wiring By-Laws developed and promulgated in 1985 are materially
deficient in regard to electrical safety. The EC has argued that under the current regulations they
have no authority to disconnect customers when an electrical hazard is found or reported by a
third party. EC have drafted new safety regulations to replace the existing regulations in
accordance with the New Zealand and Australian standards and submitted to the Government
for promulgation which is still under consideration by the GoT. However, the paramount
consideration of both EC and TPL is electrical safety and they shall take all reasonable measures
to prevent electrical hazards which may include disconnection from TPL network. It is also
worth noted that all electrical contractors in Tonga adopts the international AS/NZS 3000/2007
Wiring Code to ensure electrical wiring safety while the Regulation is still developed.
Tonga Climate: The climate in Tonga is attractive for certain forms of renewable power
generation including solar, wind and bio-mass etc. However, the hot weather gives rise to
formation of tropical cyclones in Tongan seas on an annual basis. Cyclones often destroy TPL’s
network and generation assets extensively. Even though insurance and surplus of donor funds
are available to reconstruct the damaged network, this takes a considerable amount of time to
bring the network back to a normal state of operation. This also imposes various economic and
safety risks to the people of Tonga when the nation experiences prolonged outages.
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Market Issues: The major market issues can be summarised into the following four
categories and they are discussed in detail below.
 Fuel price volatility

 Steady electricity demand growth
 Flat overseas remittances
 Shifting business landscape
Fuel Price Volatility: Petroleum dependency makes Tonga highly vulnerable to oil price shocks,
affecting the affordability of food, goods, electricity and transportation. The reliance on fossil
fuels has been exposing the Tongan economy to high electricity tariffs linked to volatile oil prices
over the last decade. More than 90% of Tonga’s overall grid connected electricity demand was
supplied by generators fueled by imported diesel. Linked to these fluctuations and the electricity
tariff reached its peak in September 2008 at 102 seniti per kWh, and again in July 2011 at 98
seniti per kWh and then slowly dropping to 70 seniti per kWh in March, 2016 due to reduction
in global fuel prices.
Shifting Business Landscape: The TERM along with the Renewable Energy Act, promote the use of
renewable energy technologies to achieve 50% RE generation target. This represents a clear
intention to reduce vulnerability to future oil price shocks and promote renewable energy to
enhance energy security. The Act shifted the energy business landscape from a simple model to
a more complex one as shown in the picture below.
30
TPL is a vertically integrated business providing electricity to the four major island groups. TPL
was established in 2008 to act as the concessionaire in Tonga’s regulated electricity regime. In
outer island communities electricity is provided either by discrete diesel gen sets or Solar Home
System serviced by community-owned cooperatives that act as ‘off-grid’ utilities and charge a
fee to users.
The Government’s TERM aspirations mean that the business model will need to change to take
into account a more complex market space, meeting new opportunities and risks faced by ‘donor
funded’ and third party renewable energy projects. To this end, internal separation of the
business will allocate costs to the various business units, enabling a better understanding of our
efficiency drivers and allowing future time of day based tariffs (e.g. to incentivise energy
storage).
Steady Electricity Demand Growth: There are two sources of electricity demand growth, the
addition of new customers and increased use by existing customers. Both are economically
driven factors that may be expected to respond to economic change.
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In the 2015 year, TPL experienced a slight electricity demand growth of about 2%. For the
coming years, electricity demand use by existing customers is likely to increase by about 3% to
5% due to economic growth factors such as airport runway upgrade, cyclone reconstruction,
expected ramping up of preparations for the 2019 South Pacific Games, increase of small
businesses such as retail and fast-food outlets, increase in street lights, and increasing
agricultural production and tourism activities. Asian Development Bank (2016) has predicted
about 3% increase in GDP growth for the years 2016 and 2017 mainly due to the increasing
economic activities as a result of decreasing fuel prices. GDP growth for the year 2015 was
recorded at 3.4%.
Other domestic factors that drive demand for electricity supply are increases in household
appliance numbers due to better quality of life aspirations, the return of wealthy Tongans from
overseas and arrival of expatriates.
The factors that drive down the electricity demand are the installation of energy saving light
bulbs, the use of energy efficient appliances and off-grid renewable energy sources (e.g. Solar).
The genuine growth opportunities mentioned above are subject to considerable uncertainty but
may be slightly on an increasing trend for the next few years and depend largely on the
effectiveness of energy efficiency campaigns over the coming years.
Flat Overseas Remittances: Like many other Pacific island nations, Tonga has become
economically dependent on migrant remittances and foreign aid as its major sources of revenue.
At the national level, remittances are the major source of foreign exchange and accounted in
2007 for about 50 percent of GDP. At the village and household levels, remittances are an
integral part of income and consumption. In addition to receiving shipping containers filled with
appliances, clothing, toys, and building materials, villagers are regularly sent cash remittances
by their relatives overseas.
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Seventy-five percent of all Tongan households report receiving remittances from overseas
(mainly New Zealand, Australia and United States), making remittances the single most
widespread source of income in Tonga.
As a result of the global financial crises, however, a steep decline of private cash remittances
being sent to Tonga was reported in 2008/09. Since then the remittances shrunk by about 60%
by the end of 2014 and accounted about for about 12% of GDP. However, remittances saw a
significant increase in the last year (to USD92 million) mainly due to the following reasons:
 Private transfers for the celebrations of King’s Coronation and church conferences
 Weakening of Tongan dollar against US dollar
 Improvement of overseas economies such as USA and Australia.
If the flat or declining remittances continues into the future, some less fortunate villagers in
Tonga may not be able to pay their electricity bills on time and the result would be to face
disconnection of power supply.
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External Business Risks: The following risk analysis shows the risks inherent from the above
legal, political, environmental, market and social issues. The suggested mitigation controls and
the current level of control effectiveness are also shown in the table:
External Business Risks

Risk Description Mitigation Control Control Effectiveness
This is a rare risk. It is expected that tariff will
Significant business continuity risk to TPL due to significant tariff
decrease significantly by 2020 with the 50% RE
increases hence economic inefficiency for poor customers if large Partially Effective
penetration target preventing large customers
customers move to off-grid renewable generation plus storage.
going off-grid.
Significant business continuity risk to TPL due to reduction in TPL has put in place Gross Metering policy to
non-fuel revenue, poor fuel efficiency and increase in diesel protect its non-fuel revenue. Storage, smart-
Partially Effective
generation maintenance costs (hence tariff increase) resulting grid & smart-meter solutions will be used to
from likely increase of on-grid distributed renewable generation. address the technical risks.
TPL take all possible actions to increase safety

awareness to public from electrical hazards.
Significant financial and reputation losses to TPL due to public
However, new safety regulations must be
lawsuit taken against the company as a result of members of Ineffective
promulgated with the recommendation of
public getting electrocuted from poor house wiring.
Electricity Commission to hold parties
accountable.
Significant business continuity risks to TPL due to hot weather in
Insurance and donor funds are available to
Tonga that forms tropical cyclones and destroy large portion of
reconstruct the network and power station
TPL distribution/generation assets. The recovering from a Effective
assets. But TPL's Business Continuity Plan
cyclone takes a considerable amount of time leaving people of
provides the speedy recovery.
Tonga without power.
Tonga's current electricity price has reduced to
Significant financial and reputation losses to TPL due to any 69.9s/kWh due to reduction in global fuel
public discontent resulting from unaffordable electricity tariffs price. The 50% RE penetration and engaging in Effective
through rising oil price. effective fuel hedging strategies will also help
reduce tariff.
Government policy formation to encourage
population growth and economic efficiency
Significant revenue loss to TPL as a result of slow electricity
activities. Reduction of electricity tariff through Partially Effective
demand growth in Tonga.
global oil price reduction and introduction of
RE sources.
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5.2 Internal Elements
People Issues: Tonga Power has a skilled and experienced senior management team consisting
both local and expatriate staff. The company structure below shows the CEO, senior managers
and their subordinates in each business unit.
The number of established staff at Tonga Power Limited has increased to 180. Around 25 of our
staff are dedicated to implementation of the projects, including development of new generation,
customer and network initiatives as well as the trainee linesmen and women working on the
village project.
Distribution field staff are subjected to line mechanic training with financial support from the
New Zealand Government. Training brings all field staff to a level where they will have
qualifications (New Zealand Qualification Accreditation or NZQA) that will be recognised
internationally, and will be certified by the Electricity Supply Industry Training Organisation
(ESITO). Line staff will become increasingly sought after by New Zealand and potentially
Australian line companies and contractors. Arrangements have been put in place for ongoing
recruitment and transfer of trained line staff into a New Zealand contracting company, a unique
opportunity for these employees to further develop their skills and improve their lifestyles
overseas. Tonga Power wants to facilitate these opportunities, but it means strengthening its
staff recruitment and training processes and managing the loss of key personnel.
35
Ongoing refresher training in first aid and fire safety / control keeps staff aware of managing a
safe working environment. Our zero accident target has helped change working habits. The
safety officer acts as the watchdog. Staff are encouraged to report near misses, which are seen
as a means to drive continuous improvement. This is a difficult transition, as the natural
response to a near miss or accident is not to report it. Increased focus on safety as the number
one priority, coupled with monthly Health and Safety meetings will help deliver and operations
around a culture of continuous improvement.
Diesel generators will continue to provide the bulk of Tonga’s power generation into the
foreseeable future. Staff with a background in diesel engines/operations will be pivotal to the
continuing smooth operation of our power stations. As more distributed generation is planned
for the future, generation staff will have the advantage of understanding both generating units
and network response. Developing staff to monitor and control the network from a central
control perspective will not be a huge stretch. However, trainings and development programs
are planned in order to keep operations safe as well as maintaining reliability.
Specific HSE initiatives are managed by the individual business unit managers. In addition, Risk
& Compliance division administers the compliance reporting and monthly HSE committee
meetings.
Tonga Power is a vertically integrated utility providing services to the people of Tonga, but we
also develop both new capacities within the core business and undertake new business
opportunities for which we will require to introduce new skills and resources. Examples include
increasing our involvement in the gas and fuel sectors, financial reporting, communications and
marketing skills, engineering design expertise, and project and commercial management. The
table below summarises areas of existing capability and areas in need of development.
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Physical Assets/Equipment Issues: Both Generation and Distribution Asset Management
Plans address issues regarding network or power station assets. Some of the major issues are
highlighted below.
Deteriorated network assets: When Tonga Power acquired the electricity generation and
distribution business from the previous owner in 2008, it inherited a deteriorated and
inefficient network. The condition of the network assets was very poor in all four island grids.
Most of the poles were ‘stick poles’, distribution lines were low hanging so low that the public
were able to touch, pole top equipment were run down, the connectors at the transformer were
loose and too many loads were connected to one transformer. The poor quality network
presented several risks: high level of losses, estimated to be up to 20%, voltage fluctuations
causing damages to household appliances and safety hazard to the public.
Upon acquisition by TPL, this poor network status was improved in safety and reliability. The
New Zealand Government through the New Zealand Aid Program has generously donated a total
of NZD$32 million to finance the Tonga Village Network Upgrade Project (TVNUP) with $7.5
million as TPL’s contribution, which runs in three stages. The TVNUP targets about 50 villages
with the worst stick pole networks, the poorest electricity transmission, and are the greatest
distance from the capital, Nuku‘alofa. The first phase of the project started in June 2011 and the
final stage of the project is expected to be completed in May, 2018.
The TVNUP project helps improve the Tongatapu village network largely. However, Nuku’alofa
CBD and outer island network status still require further improvement. The poor state of
equipment on these networks include de-rated cables, broken insulators, weak poles, broken
air-break switches, incorrect HV/LV fuses, over utilized transformers and connectors and much
more. The company is still seeking donated funds to improve these networks.
SCADA (Supervisory Control and Data Acquisition) System: The SCADA systems installed at
Tongatapu (Popua) and Vava’u has been a useful tool for generation (for ongoing monitoring of
the engines and generators) and distribution network planning. In the Power Station, each
generator can be monitored on a shift by shift basis for fuel use and efficiency. The data is
helpful in monitoring any fuel losses including theft as well as engine condition monitoring.
However, there are limitations to TPL’s current SCADA capabilities. Ha’apai and ‘Eua do not
have SCADA systems; these power stations use utility metering with logging capabilities to
capture electrical parameters, with the engine parameters monitored locally. In addition,
SCADA parameters cannot be monitored from the Tongatapu main Power Station due to lack
of remote communication capabilities. TPL is waiting to use either Satellite or Fiber
communication links to monitor outer island power station equipment performance.
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Security of supply (N-1): TPL’s Security of Supply Policy ensures enough FIRM (diesel)
generation capacity is available at short notice to cover faults or to meet sudden changes in
consumer demand. In other words, if the largest capacity generator is out of action due to a
breakdown, other generators in the fleet must be able to continue to supply power to meet the
consumer demand at any time of the day. The solution for the N-1 redundancy policy is to
duplicate the largest generator in each of TPL’s four power stations. The policy assumed
intermittent generation (solar and wind) cannot be relied on at any time and are excluded.
Currently Tongatapu and all three outer islands meet the N-1 security policy; however, there is
slight ambiguity of maintaining the reliability of supply due to potential load growth during the
upcoming Pacific Games in 2019.
Tongatapu Submarine Cables: The two submarine cables (armoured three core PILCSWA
70mm2 Cu) across the lagoon, from Popua to the pole line at Folaha, connecting the station
supply to existing Feeder Three (Vaini), are about 30 years old and are due for replacement. The
two (2) cables are not rated submarine cables, one cable has failed already and the other cable
is at the end of its useful life and may fail anytime. This presents a higher probability of failure
than TPL can allow when considering the risks and consequences of an unplanned failure.
In addition, TPL has established that there is no equipment available at short notice on
Tongatapu that could assist in locating an underwater cable fault. This leads to the possibility
that it would eventually require (in the event of identifying the location of the fault) lifting the
cable and completing a repair. TPL considers the cost and time delay would lead to an
unsatisfactory outage time for Feeder Three. The replacement of this cable will also ensure a
capacity that anticipates future load growth considerations.
It is expected that if the submarine cable (i.e. feeder 3) fails, customers on feeder 3 can be
supplied by back-feeding from the feeder 1, however, this could lead to overload of feeder 1
causing supply to feeder 1 customers to also fail.
Bulk Diesel Storage Tank: TPL currently has only one bulk storage tank installed at the Popua
Power Station. The present storage tank has a capacity of 250,000 liters and supplies fuel to
diesel generators for 10 days (25,000 liters supply per day). However, in case of catastrophic
damage to the present tank due to a disaster (e.g. earthquake, fire etc.), the power station does
not have any redundancy plan for storage of fuel for generation of electricity. TPL will build a
second storage tank with the same capacity in the very near future.
Generator Replacement: Tongatapu (Popua) power station has six CAT generators (3516B)
and two MAK generator (6CM32). All six 1400KW CAT generators have come to their end of
their economic lives, hence, requires replacement. TPL have put in place plans to retire existing
CAT generators and replace them with new generators or refurbish them at low costs. The risk
is not that significant as long as the old generators are replaced or refurbish at regular intervals
in the future in accordance with the manufactures’ recommendations. Outer island generators,
however, have been overhauled in a timely manner, thus have no such risks.
However, it should be noted that TPL is moving towards the 50% renewable energy (including
energy storage solutions) penetration by 2020. In this case, these generators will not be made
operational on a continuous basis but will be used as future backup firm generation. It is
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important to note that the majority of the engineering and planning for the incorporation of
renewable energy into the electricity grid has been based on the current diesel generation
portfolio. Therefore refurbishment of the existing generators would be beneficial with
continuity of the future development plans.
Product/Service and Supply Issues:
Services standards: TPL’s service standards to consumers are regulated through the Electricity
Concession Contract. Any violations of these standards contribute to rule breaches and payment
of penalties by TPL to affected customers. A summary of these services standards are described
below:
 Maximum time for new connection (<30 meters – 4&10 days, >30 meters – 10&20 days)
 Minimum notification time prior to disconnection (5 days)
 Reconnection after payment of arrears & reconnection fee (1 day –rural, 2 days – urban)
 Maximum time for first bill to be delivered (50 days)
 Maximum time between bills (45 days)
 Respond to customer queries (5 days)
 Maximum time for power supply connection – maintenance works (5 days advertise in
the wider media)
 Temporary disconnection of supply for maintenance (2 days)
 Response time to emergency or faults calls (2 days)
 Voltage stability standards (240V +/- 10% & 415 +/- 5%)
 Response to voltage test requirements (5 days)
 Fuel efficiency target (4.0kWh/L)
 System loss target (12%)
TPL is in compliance with all the above requirements except the voltage stability standard.
Occasionally, breach of this standard occurs due to poor quality networks.
Customer complaints: TPL manages all customer complaints through its Customer Complaints
Management Policy. All complaints are reported to the Board on a monthly basis. There are on
average about 40 customer complaints from all four island groups per month, and mainly
relation to: incorrect meter reading, not receiving a power bill, incorrect bill received,
over/under voltage, meter error, over charge, high consumption, and power not connected after
disconnection for non-payment etc.
Unsafe working practices: TPL staff are well trained in ESITO L2, L3 and L4 requirements for
working in electrical network equipment installation activities. However, occasionally, they
unintentionally carry out unsafe working practices that in the past has included incorrect cable
and equipment installation due to ambiguity and/or a lack of training. This has caused damages
to customers’ household appliances resulting in compensations to be paid by the company
however the major risk is the lives of the public and those staff involved.
Power quality: Occasionally TPL is in breach of power quality (voltage and frequency)
standards due to the poor state of the network equipment. In these occasions TPL pays
39
compensations to the affected customers upon completion of an investigation conducted by TPL
engineers and if necessary by independent sources.
Reliability of supply: Reliability measures indicate the average interruption time (in minutes)
that a customer experiences power outage due to a network failure for a certain period, which
can be for up to a month or more. The key reliability measure TPL uses is SAIDI (System Average
Interruption Duration Index), which measures the average total duration of interruption per
connected customer. During the last 2014/15 financial year, on average a connected customer
has experienced about 1058 minutes (about 1.4 hours per month) power outage. This value is
quite high when compared with countries such as New Zealand or Australia but quite acceptable
for pacific island countries like Tonga. However, it is important to note that about 50% these
outages have been caused by planned events mainly for the network upgrade projects.
Business Systems and other Resources: TPL uses various software systems for different
purposes by different business units. A summary of software systems used by TPL are shown in
the table below.
TPL Business Systems

Software Name Purpose
Orion Billing System Billing and customer relations management
QuickBooks Accounting Software Accounting and reporting
File Maker Asset Management Software Asset management, maintenance and network auditing
Quantate Risk Management Software Risk analysis and reporting
GIS Software Geographical interface system
Sincal Software Load flow analysis
Xsol Software Business process redesign and mapping
There are issues associated with the use of the above softwares as described below:
 File Maker Asset Management Software (FMAM) – the reports generated from FMAM
software are sometimes incorrect (e.g. SAIDI data). This leads company to making
incorrect decisions. The main reason behind this is that users input incorrect raw data
which in turn produces incorrect output reports.
 GIS Software – requires upgrade and update.
 Sincal Software – requires upgrade and update.
TPL has started an Enterprise Resource Planning (ERP) project which will unify some of the
above software systems into one single software platform.
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Internal Business Risks: The following risk analysis shows the risks inherent from the above
internal issues. The suggested mitigation controls and the current level of control effectiveness
are also shown in the table.
Internal Business Risks

Risk Description Mitigation Control Control Effectiveness
Significant financial and reputation losses to TPL due to payment
Expedite transformer inspection program to
of high penalties to customers when customers' household
identify loose neutral connections at the
appliances are damaged or when they receive serious electrical Partially Effective
transformers. TVNUP project also help
shocks from voltage surge resulting from loose neutral connections
mitigating this risk.
at the transformers.
Nuku'alofa and outer island Network Upgrade
Significant revenue loss to TPL due to poor state of the Nuku'alofa
projects have been planned. TPL is waiting to
and outer island distribution networks that contribute to high line Ineffective
receive funds from potential development
losses and voltage fluctuations.
partners.
Significant revenue and reputation loss to TPL due to non- Generators must be maintained and replaced as
achievement of N-1 security policy as a result of ageing generators per the manufactures'' recommendations. A
Partially Effective
which could go out of actions any time of the day due to sudden generator replacement plan is in place for all
breakdowns. four island power stations.
Significant health impact on the power station staff due to Ear muffs are available at the moment. Noise
excessive noise levels emanated from the large diesel engines. pollution could be further improved by
Effective
Current noise level is 110-120dBA in the power station which is installing sound proof doors and windows (e.g.
greater than permissible level of 50dBA. double glaze vacuum windows and doors).
Significant financial and reputation risks to TPL due to public Survey non TVNUP villages and outer island
fatality or serious injury to a member of the public by touching low networks to identify and fix low hanging LV Partially Effective
hanging live LV conductors. conductors or conductors close to buildings.
Safety and network construction training
Significant financial, reputation and HSE risks to TPL due to injury, provided to all staff ESITO and NZQA standards,
death, or public legal action against TPL as a result of staff carrying L2, L3 and some L4 (not enough certified
Effective
out unsafe working practices and installation of incorrect equipment for all L4 certification). Develop a
equipment. design and construction manual to be used by
staff during installations.
Significant financial and reputational risk to TPL due to incorrect New ERP system will replace the existing File
reports generated from the File Maker software. This makes Maker software. Until then, systems users must Partially Effective
company making incorrect decisions. be trained to manage the system accurately.
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5.3 Summary and SWOT analysis
Strengths Weaknesses
 TPL’s reputation as a best performing vertically  Nuku’alofa CBD and some of the outer island
integrated Electricity Generation and Distribution grids are still at poor quality state contributing
Company in the Pacific. significant amount of outages, energy losses and
 Electricity Concession Contract (ECC) provides the safety issues.
foundation for TPL stay to in business. ECC  A greater focus is placed on Tongatapu
encourages donors and development partners to development activities (both distribution and
release debt and donor funds. generation) leaving less attention on outer
 Established four island network and power station islands.
facilities and assets worth of $110M.  Deteriorated network and ageing generation
 Strong liquidity ratio of 1.4 meaning that company assets in some areas.
has sufficient cash to service short-term debt  Loose or broken neutral connections at the
obligations. transformers cause some customers to
 Strong capital structure or low gearing: 25% debt: experience line voltages (i.e. 415V) instead of
75% equity. phase (230V) voltage causing damages to
 Experienced and skilled senior management team household appliances. TPL paying significant
consisting both local and expat staff. amount of compensation for these damaged
 World class systems and tools have been appliances.
established to perform company operations  Crews conduct unsafe working practices on the
smoothly. network. They should be given adequate
 Lower electricity tariff at 69.9 s/kWh. refreshment training.
 Accomplished system losses and fuel efficiency  Reliability of supply measured in minutes of
rates. supply interruption time (SAIDI) getting worst
 Much improved distribution network to provide shown through the rising SAIDI min’s trend.
reliability of supply.  Reports generated from File Maker software are
 TPL complies with all the service standards and sometimes inaccurate due to incorrect input
efficiency targets stipulated in the Electricity data.
Concession Contract.  GIS to be upgraded and updated.
 Ability to earn non-tariff revenue outside the  Obsolete network design & construction manual.
energy selling business (e.g. service lines, street  Wasting considerable amount of time on
lights etc.). This is about $2M per annum. researching technologically unproven project
 Skilful and intelligent board who make well initiatives (e.g. bio-diesel, wave technology,
informed strategic decisions. water to power etc.)
 Customer growth is expected to increase by about  Increasing workload on existing senior
3 to 5% per annum over the next four years. management due to company growth.
 Government’s support for raising donor funds for
future RE projects to achieve 50% RE penetration.
 Reduction in customer complaints.
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Threats Opportunities
 Electrical and the Renewable Energy Acts allow  Access to donor funds for RE generation and grid
third parties to self-generate (off-grid or on-grid) improvement projects.
renewable energy causing revenue reduction to  Policy makers should be influenced to
TPL and as a result tariff could increase further. discourage off-grid RE generation.
 Increasing RE penetration to achieve the TERM  Design and develop suitable power transfer
objectives leads to loss of grid stability, safety, agreement with DG owners to recover all TPL’s
reliability of supply and increase generation asset costs.
maintenance cost.  Increasing RE penetration provides TPL an
 Increasing off-grid RE penetration by large opportunity to embrace smart-grid technologies
customers leads to economic inefficiency and to provide grid-stability and reliability. DG
leaving poor people more vulnerable to further generation sources can be disconnected using
tariff increases. smart-grid technology when they have a
 Increasing RE penetration causes fuel efficiency to negative impact on the generators load factors.
decrease due to reduction of load factors from  Opportunity to look for multi-tariff structures
their intermittent operations. with increased RE penetration (e.g. life-line tariff,
 Lack of safety regulation in Tonga makes it demand based tariff at the peak time, RE use
impossible to hold parties accountable when tariff etc.)
there is an electrical accident.  TPL should manage most of the RE generation
 Tonga’s vulnerability to tropical cyclones means projects placing a maximum limit for customer
that it takes a considerable amount of time to owned distributed generation.
restore the electricity network once destroyed by  Encourage EC to promulgate safety regulations
a cyclone. through the government.
 Highly volatile fuel prices expose to high  Seek help from development partners for speedy
electricity tariff in Tonga. recovery of the network destroyed by the
 Slow electricity demand growth in some years cyclone.
reduces cash inflows to TPL and making it unable  Achieving government/TERM objective of 50%
to invest on efficiency improvement projects. RE generation leads to significant tariff reduction
 Possible reduction in migrant remittance causes if the projects are donor funded.
people to use less electricity and exposes people  Encouraging government policy makers to boost
to disconnection when they are unable to pay the economy so that more people use electricity.
their bills on time.  High RE penetration could reduce the diesel
 Donors reluctant to fund money on projects due generators base load requirement. This enables
to various reasons. opportunity to draw donor funds to replace
them with small generators.
 Seek cheaper IPPs who sell electricity to TPL at
lower rates than cost of supply.
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6. PLANNING PERIOD STRATEGIC OBJECTIVES & CHALLANGES
The following table shows six key strategic objectives formed by TPL during a recent strategy
update workshop for the next four years. The benefits from each strategic objective, key
challenges that TPL faces when pursuing these objectives, and how they relate to our overall
vision are also shown in the table.
Strategic Objectives & Challenges for the Planning Period 2017 -2020
ID Strategic Objective Benefits Link to Vision Key Challenges
Achieving 50% electricity generation from Seeking funding for selected projects, building
RE sources by 2020 in order to achieve the Tariff reduction, Increase Affordability, relationships with donors, slow progress rate,
1
government and TERM objective as well as economic efficiency and growth Sustainability managing power purchase agreement with IPP
significant tariff reductions. owners.
Very expensive to implement smart-grid
Adopting technologies to manage the technology, may difficult to seek funding for asset
Enhance grid stability, security, Safety, Reliability,
2 complexities arising from increasing RE improvement/replacement, immature energy
safety and reliability of supply Sustainability
penetration. storage technologies, develop/update asset
management plans.
Improving the network and replacing Improve power quality, line Safety, Reliability, Seeking funding for selected projects; update
3 ageing assets to improve safety and losses, and reliability of supply Sustainability, asset management plans, compliance with ECC
reliability of TPL's services. (or N-1 security) Affordability standards, human resource availability.
Cultivating a hazard free safety culture to Reduce number of hazards,

Regulation promulgation takes considerable
4 minimize any electrical hazards to both incidents, accidents and near Safety
amount of time, HSE structure requires clarity.
public and staff. misses
Reduce non-value added,

Investing in excellent business processes Key staff constraints leading to outsourcing,
increase quality of service,
and systems in order to improve minimising very high consultation costs,
5 reduction in customer Sustainability
operational efficiency and quality of TPL's compliance with overburden policies and
complaints, increase
services to customers. procedures.
employee/customer satisfaction
Managing all external funding and internal Seeking free or low cost funding, lack of clear
financing sources successfully in order to Cost reduction, increase profit, policies on hedging, self/group interest on
Affordability,
6 maximise the shareholder wealth for the tariff reduction through implementing wrong projects, possible
Sustainability
best interest of the company and the investing on right projects government tariff freeze, unfavourable economic
people of Tonga. activities.
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These strategic objectives are discussed in detail below:
6.1 Strategic Objective 1
In-order to deliver the Government’s renewable energy target of 50% electricity generation
from renewables by 2020 as well as applying sustained downward pressure on the electricity
tariff for all customers, TPL plans to complete the following projects during the 2017-2020
planning period. Some of these projects (up to case 4) have already been completed, and others
will be completed before 2020 with either donor funding, TPL funding, debt funding or under a
PPA by IPP as shown in the table below. It is assumed the majority of TPL’s investment in these
projects will likely increase the non-fuel component of tariff but overall a net reduction in tariff
(up to 20 seniti/kWh) will result due to a greater off-set resulting from the substitution of fuel
through the fuel component of the tariff.
Road to 50% RE Penetration

Incremental Accumulated Peak Annual Energy Accumulated Net Penetration
Case Plant Involved Year Built
Peak kW Output (kW) Output (MWh) Energy (MWh) (%)
1 Maama Mai (PV) 1,332 2012 1,332 2,100 2,100 4%
2 La'a Lahi (Vavau Solar) (PV) 420 2013 1,752 662 2,763 5%
3 Case 2 + Vaini PV 1,000 2015 2,752 1,577 4,339 8%
4 Case 3 + 320KW SDG PV 320 2012 3,072 505 4,844 9%
Case 4 + 300KW
5 300 2015 3,372 473 5,317 10%
(Police/Digicel) PV
Case 5 + 750KW OIREP PV
6 750 2016 4,122 2,168 7,485 14%
(550KW Ha'apai + 200KW Eua)
7 Case 6 + 1.3MW IPP Solar PV 1,300 2016 5,422 2,050 9,535 17%
8 Case 7 +2.2MW Wind 2,200 2017 7,622 6,360 15,895 29%
9 Case 8 + 2.2MW Wind 2,200 2017 9,822 6,360 22,254 35%
10 Case 9 + 3x1.3MW Solar PV 3,900 2019 13,722 6,150 28,404 41%
11 Case 10 + 2.2MW Wind 2,200 2019 15,922 6,360 34,764 52%

Case 11 + 3MW (18MWh) IPP
12 3,000 2019 18,922 5,585 40,348 61%
Storage
Solar: Solar power is the conversion of sunlight into electricity directly using photovoltaics (PV)
technology. Photovoltaics were initially solely used as a source of electricity for small and
medium-sized applications, from the calculator powered by a single solar cell to remote homes
powered by an off-grid rooftop PV system. However, solar PV is rapidly becoming inexpensive,
hence grid-connected solar PV systems and medium size utility-scale solar power stations can
be built in Tonga to harness renewable energy from the Sun.
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Wind: Wind powered generation is one of the most mature and cost-effective renewable
technologies available today. Although wind resource measurements in Tonga have had varying
results, simulations show wind generation could be cost effective on Tongatapu due to the high
cost of diesel. A wind farm of 6.6MW could produce 20% of Tonga’s electricity. Small wind is
also an option for outer islands and/or remote locations.
Storage: Electrical energy from renewable energy sources could be stored in storage devices
(e.g. Lithium-ion or Redox flow batteries) when their production exceeds the load demand and
returned to the grid when production falls below the load demand. Storage would help to shave
Tonga’s peak demand at night time, ramp-control/frequency regulation and provide reserve
capacity in the supply system. Storage systems, however, are expensive to adopt at the moment
but storage prices are expected to come down in the future.
Key challenges faced by the objective are:
 Achieving 50% electricity generation from renewables by 2020 although quite ambitious is
very achievable. Fast tracking of project development and pre-emptive implementation does
not come without risk and will need to be properly managed by TPL.
 Developing appropriate Power Purchase (PPA) Agreements with IPP owners and managing
outcomes will present a challenge to TPL. Outsourcing energy from IPP owners’ enables cost
saving (both fuel and non-fuel). At the same time TPL has to incur additional expenses
including the cost of automation to monitor IPP’s RE generation facility to ensure safety and
stability with fuel savings being passed through to customers.
 Seeking funding for selected projects and building relationships with development partners
remains a priority but is also a challenge to TPL. There remains a high level of dependence
on donor funding for projects which tends to result in longer lead times.
 Most donor-funded projects have a very strict policy on the origin of equipment that may
not be optimal for Tonga’s climate.
 The cost of electricity generation from renewable energy sources relative to generation from
tradition energy sources still tends to be higher although costs continue to decline.
TPL’s distribution system traditionally comprised of radial circuits fed from a

centralised power station and designed to supply load based on customer demand while
maintaining an adequate level of power quality and reliability in compliance with the
Electricity Concession Contract. Protection is based on relays and fuses that use nested
time delays to clear faults by opening the closest protective device to a fault and
minimise interruptions. It is designed to safely clear faults and get customers back in
service as quickly as possible. Sectionalising switches are manually controlled to restore
load in un-faulted sections downstream from the failure.
TPL’s current distribution systems are generally considered to be ready to support small
DG sources without change, however, with increasing RE penetration, TPL’s current
power distribution system may experience complications in connecting to RE sources.
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Therefore, as aggregations of RE continue to grow, changes in design and control
practices will eventually be required at all levels of the power system.
The limitations of TPL’s current system are:
 Current voltage control is achieved with devices that have localised controls. These
schemes work well for today’s radial circuits (where flow is outward from the power
station to loads) but do not handle circuit reconfigurations and voltage impacts of
locally distributed intermittent RE systems well.
 Similarly, for radial distribution systems, fault current protection is predicted on the
principle that current flows from the power station to the loads. The presence of
distributed RE sources introduces new sources of fault currents that can change
direction of flow, introducing new fault current paths, increase fault current
magnitudes, and redirect ground fault currents in ways that can be problematic for
certain types of overcurrent protection schemes.
 Minimal communication and metering infrastructure is in place to aid in restoration

following faults on the system.
 Limited communication infrastructure exists to facilitate control and management

of distributed RE and storage resources. Without communication and control, the
high penetration of RE generation on most circuits will be limited.
 There is no communication to customer facilities to allow customers and customer

loads to react to electricity price changes during on/off peak times.
 Some automation schemes are being implemented to reconfigure circuits to improve

reliability, but these schemes do not achieve the coordinated control needed to
improve energy efficiency, manage demand and reduce system losses.
 High penetration of RE can cause a reversal of power flow direction on the primary
feeders leading to lack of coordination or sensing in protection devices.
 Increasing RE sources can significantly stress network equipment such as transformers

due to its cyclic output variations.
To directly address the issues related to connecting large amounts of RE sources in the
distribution system, smart-grid technological requirements in three key areas are
required:
47
Category Smart Grid Technological Requirements
All Diesel and RE generators should communicate with each other in a manner that ensures adequate
load sharing, system stability, proper frequency and voltage control, and optimal system performance in
terms of efficiency and energy production cost.
Energy storage devices should be used to correct temporary load/generation mismatches, regulate
frequency, mitigate flicker, as a result of fluctuating RE sources and assist advanced islanding functions
and service restoration.
Power Generation RE sources should be made to participate actively in the scheme by adjusting reactive or real power
levels as needed. Transformers, voltage regulators, local inverter regulators and switched capacitors
should be interactive with each other by means of communication links with a control point to ensure
voltage stability and required reactive power flow.
Inverters should be used to prevent unacceptable voltage conditions in the local RE unit.
Advanced inverters/controllers and energy management systems (EMS) should be sophisticated enough
to interface with smart-grid technology to maximise efficiency, quality and reliability.
The distribution systems should include more extensive use of directional relaying, communication
based transfer trips, pilot signal relaying, and impedance-based fault protection schemes to work
effectively with multiple distributed RE sources on the distribution system.
Sectionalising schemes for interactive service restoration should enable distributed RE systems to pick
help pick load during the restoration process.
Distributed RE and distribution devices should address grounding incompatibilities among power system
sensing, protection and harmonic flows.
Over current protection should involves coordinated operation of many devices including circuit
Distribution breakers, relays (differential or directional), reclosers, sectionalising switches, and various types fuses.
Increasing RE sources can significantly stress network devices such as transformers. Through advanced
status monitoring of network assets a replacement can be scheduled before the device fails or causes an
outage.
Monitoring voltage profiles (and power factors) at various points of the distribution lines and loads to
assess impacts on the customers and take corrective actions to avoid any voltage regulation breaches.
Automatic fault location and restoration by reconfiguring feeders to identify fault locations and route
around fault locations.
Smart meters should be installed at the customer supply point in order to manage customer loads
remotely.
Smart metering technology helps to provide consumers with information that allows them to use
Customer Supply electricity only when it is available from renewable at cheaper price.
Smart meters can also be used to collect data on power quality, power outages, power factor, reactive
power usage, and grid voltage and frequency to be used in the control of RE generation sources.
 High cost associated with the implementation of smart-grid technology means TPL has to
turn to donors for funding.
 Difficult to gain Board approval on high-tech projects because the high cost of
implementation can often outweigh the economic benefits from the project. Additionally the
economic benefits are not always as direct as compared to say introduction of renewable
energy and therefore take time to adequately appraise and provide to the Board for decision.
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Strategic objective 3 focuses on successful asset management activities such as procuring,

maintaining and renewing/replacing network and generator assets in order to improve the
asset condition to enhance power quality, safety and reliability. TPL inherited a substantial
amount of ageing and/or defective assets from the previous owner. These include ‘stick’ poles,
inefficient transformers, broken or damaged insulators, fretted cables, and ageing generators.
The deficient assets exposed TPL for non-compliance with frequency, fuel efficiency and line loss
targets set in the Concession Contract. Most of the inefficient network assets are being replaced
by donor and TPL funded projects. Some generators have been replaced at TPL’s cost (e.g.
2.4MW MAK generator at Popua Power Station). TPL strives to achieve a future asset
management strategy that enhances the efficiency of our network and generation assets and this
is explained in the next section in detail.
 There are a number of projects in the pipeline of which TPL has a limited amount of ability
to fund. Seeking funding for selected projects may also be a challenge especially as many
donors prefer to invest in RE projects to reduce tariff rather than asset improvement
projects that enhances safety and reliability.
 Continuous review and updating of asset management plans continues to be a challenge to
TPL due to limited skilled staff in house.
 With all the improvement plans currently set in motion, TPL is still facing challenges of
meeting standards stipulated in the Electricity Concession Contract. One of the major
challenges TPL faces is meeting voltage standards. Poor quality transformer connections
and service lines results in supply voltage fluctuations outside the regulatory limits. TPL
usually pays a significant amount of compensation and penalties to affected customers when
their household appliances are damaged from high/low voltages.
Cultivating a hazard free safety culture to minimize any electrical hazards to both the public and
staff is one of the top strategic objectives for Tonga Power Limited. The key deficiency in Tonga
is the need for increased safety regulations which must be approved by Cabinet. The current
safety regulations are largely outdated and materially deficient. It is EC’s responsibility to
develop safety regulations and forward them to Parliament for promulgation. The company
however, uses ESITO safety standards in electrical network construction and largely leads the
pacific when it comes to safe work practices.
 EC’s capacity to develop and promoting safety regulations.

 Safety regulations are to be approved by the Cabinet before they become legally effective.
This process normally takes a long period of time.
 Adoption of safety regulations by all staff and employees of TPL as well as industry members
such as electrical contractors.
49
As shown in the diagram below, Tonga Power uses a ‘Systems Approach’ to achieving continuous
improvement and therein maximising profits to our shareholder. During our annual strategic
planning meeting, the long-term vision is translated into tangible strategic objectives. The
strategies are then developed in order to achieve these objectives. The strategies are delivered
through our comprehensive five year business plan. TPL’s Performance Management Plan
identifies if the objectives have not been achieved for the year due to any disturbances (or risks).
The objectives are then reviewed and readjusted for the following year.
Investing in leading business processes and systems in order to improve the operational
efficiency and quality of TPL's services to customers is vital to TPL’s long term success. The
company has already engaged in a number of systems such as risk management, GIS, asset
management, business continuity management, HSE management, process redesigning, and
billing and payroll activities.
The relationship between TPL and the community is critical if TPL is to achieve its core purpose
of providing reliable, safe, sustainable and affordable electricity to the people of Tonga, while
satisfying its shareholders requirement for the public good.
TPL’s customer strategy aims to build solid customer relations and satisfaction through the
implementation of activities such as enhanced communication with customers, pre-payment
metering, electronic bill payment services, energy efficiency education and the eventual
introduction of ‘multilevel’ tariffs to manage the costs for the most vulnerable in the community.
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 Systems and processes can sometimes overburden the existing staff when adequate staffing
levels are not available. When the staffing levels are reduced, the existing staff can find it
difficult to comply with processes and systems which in turn can lead to inaccuracies and/or
poor quality outputs.
 The lack of key staff availability to perform some major business functions leads the
company to outsource expertise at a generally higher cost.
 Design and development of multi-tariff systems to satisfy all classes of customers.
 Design best regulatory framework for the current (second) Reset Period including sensible
and proactive adjustments to the Concession Contract.
Managing external funding and internal financing sources successfully in order to maximise the
shareholder value is a key TPL focus. The external capital funds can be provided from various
sources: free capital from donors at no cost, debt finance from banks and debt finance from
development partners at low cost. Internal funds are expended from the company’s revenue
earned through selling electricity to customers or from company’s retained earnings. TPL
conducts comprehensive economic analysis in order to ensure funds are invested on selected
value added projects that maximise shareholders’ value. TPL has established a number of
financial policies and procedures when it comes to capital or operational expenditure. Controls
are in place for verification and approval by another party as necessary.
 Scarcity of capital funding for investment on all the available projects is a key issue for TPL.
The challenge for TPL is to choose a portfolio of projects that fits the best available funds for
implementation as a number of potentially good projects may be forced outside the five year
planning period.
 In order to manage the diesel price volatility risk successfully, the Concession Contract
allows TPL to undertake ‘fuel hedging’ to ensure price stability. However, the challenge for
TPL is to use the right hedging instrument at the right time, which neutralises profit
prospective that requires external advice and expertise.
 Unfavorable economic activities also challenge TPL’s profit prospective. This in turn reduces
investment funds for TPL funded projects resulting in TPL having to rely heavily on donors
to fund future projects. The economic activities such as poor economic growth, high oil
prices, low overseas remittances and higher than desirable inflation also has an impact on
TPL’s ability to deliver a lower electricity tariff to the people of Tonga.
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7. STRATEGIES/ACTIONS TO SATISFY OBJECTIVES
The proposed strategies and strategic actions for the planning period have been divided in to
the following three categories:
 Priority projects essential to achieve 50% RE penetration target in the future ($166 million).
 Projects that are already in progress ($67 million).
 Projects that are committed by TPL to complete in the future ($20 million).
7.1 Priority Projects
The eleven projects shown in the table below have been specially designed to achieve 50% RE
target. The priority project portfolio includes 4x1.3MW solar and 3x2.2MW wind farms designed
to achieve the 50% RE penetration. The total capital cost have been estimated to be about $166
million and expected to be funded by either development partners, lending agencies, private
equity investors and to a lesser extent, Tonga Power Limited for expenses such as land, fencing
and civil works.
High Priority Projects Achieivng 50% RE Target

50% Est. Cost Tariff Impact
Target (T$) (s/kWh)
Demand Side Efficient lighting, MEPS, replace old appliances, water
1 Management and EE 4.0m 3 heater controls, energy audits, tax changes, peak load
Energy Efficiency awareness, TOU or demand based tariffs .
Nuku’alofa Network
improve reliability of the network further enabling RE. Full
2 Upgrade Project EE 50m 2
roll out of smart metering should be undertaken at this
(NNUP)
stage.
Allows 20% RE penetration, essential for Wind Generation

Enabling Power System in the East, partially funded by the World Bank (T$ 1.0m).
3 EPS 2.0m TBD
(EPS) Project A Submarine cable replacement is outstanding including
meshed ring philosophy and fourth feeder

1.3 MW Solar PV
4 0.17 6.0m 2 into a sinking fund to replace assets. IPP being sought for
(Central TBU)
project.
2.2 MW Wind Farm
5 0.26 20m 5.5 into a sinking fund to replace assets. NZ MFAT studying
(Niutoua)
project. A new tariff should be initiated at this stage.
Allows 35% RE penetration, includes approx. 2 MWh of
energy storage (potentially to existing RE generation
6 EPS Project B EPS 5.0m TBD
schemes), SCADA upgrades, existing generation fine
tuning, capacitor banks. CBs and comms.
2.2 MW Wind Farm
7 0.35 20 m 3 into a sinking fund to replace assets. Japan studying
Extension (Niutoua)
project.
Allows 50% RE penetration, EXCLUDES energy storage,
8 EPS Project C EPS 2.0m TBD
includes capacitor banks. CBs and comms
3 x 1.3 MW Solar PV
9 0.41 18m 3 Tariff impact assumes donor funded investment
(Central-West)
2.2 MW Wind Farm
10 0.52 20m 2.5 Tariff impact assumes donor funded investment
Extension (Niutoua)
Energy Storage (8 to 16 Required to prevent renewable energy spill from
11 0.61 19m TBD
MWh) exceeding 20%.
Total= 61% 166m 21 s/kWh
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The above mentioned priority projects are described in great detail in TPL’s Least Cost
Development & Investment Plan (LC-DIP) prepared separately to this plan however, projects
are described briefly below:
Demand Side Management & Energy Efficiency: This project is the least infrastructure
intensive project, and is largely focused around foundation issues with regards to the electricity
sector. It is chiefly concerned with institutional, policy, regulatory, legal, financial, planning,
training and capacity building. This is a suitable starting point as it does address and form a
strong platform for more intensive investment in renewables that will more directly achieve the
goals and objectives as set forth through the TERM.
Tongatapu’s load profile includes an evening peak lasting for 2-3 hours. In summer the evening
peak is typically about 0.5 MW higher than the day time peak and in winter the evening peak is
typically slightly over 1 MW higher than the day time peak. The overall summer load is higher
than the winter load. The evening peak creates a need for short-term generation capacity over
and above the capacity required for the daytime load. Since electricity tariffs are set partly in
reference to TPL’s asset base, this requirement effectively increases electricity costs for all
consumers.
The addition, solar photovoltaic (PV) capacity in the future will reduce the load served by the
diesel generators during the day so that, in the absence of measures to reduce the evening peak,
the difference between the load that is met by the diesel generators during day time and the
evening peak will increase.
The overall objectives of the project is to implement demand side management (DSM) and
energy efficiency (EE) measures to:
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 Contribute to achieving the overall goal of 10% reduction in average monthly energy
consumption in the residential, commercial and public sectors.
 Establish the policy and implementation frameworks to move towards the goals of
reducing fossil fuel imports by 10%, achieving energy savings and reducing GHG
emissions by the end of 2020.
The project focuses on such activities as: energy audit program & energy efficiency education
program, residential lighting replacement, solar powered water and freezer systems, old fridge
and freezer replacement, home water heating control, air-conditioning replacement, water
pumping peak shaving, TOU or demand based tariffs, and load shifting program.
Initial project investment costs have been estimated at $4 million and is expected to yield about
2MW evening peak shaving and 3 seniti/kWh tariff reduction.
Nuku’alofa Network Upgrade Project: The Nuku’alofa Network Upgrade Project (NNUP) will
follow the same model as the NZMFAT funded Tonga Village Network Upgrade Project (TVNUP)-
Stage 1 completed in August 2013. The estimated cost of the NNUP is $50 million. The project
deliverables include renewing 8,358 customer connections, upgrading 23 km of high voltage
lines, upgrading 185 km of low voltage lines, and replacing 5,330 power poles, renew 8,358
customer connections, 1,000 new connections, and advanced prepayment meters to cater for
new low usage connections.
The NNUP is expected to provide the following benefits:
 Reduced network losses, both technical and non-technical (including reduced incidence of
power theft).
 Increased access to electricity.
 A safe and reliable electricity supply to approximately 7,960 households and businesses in
the greater Nuku’alofa area in Tongatapu.
 Reduced electricity tariffs as a result of reduced diesel fuel consumption (through reduced
system losses), reduced capex spend and improved operating and maintenance capability
within TPL, with direct financial benefit to households and businesses.
 Social benefits in terms of an affordable and reliable electricity supply.
 A safe electricity network, both for the public and for staff working on the network assets.
The project is expected to reduce diesel consumption by 1.9Gwh (500,000 liters or $800,000)
per annum.
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Enabling Power System (EPS) – Projects A, B, & C: As discussed in Section 6.2, TPL’s current
distribution systems are generally considered to be ready to support small DG sources without
change, however, with increasing RE penetration, TPL’s current power distribution system may
experience complications in connecting to RE sources. Therefore, as aggregations of RE continue
to grow, changes in design and control practices will eventually be required at all levels of the
power system. The EPS projects are expected to provide the following changes to the current
generation and distribution systems in line with the ‘smart-grid’ technology:
 Phase A: Feeder 4, Ring Feeder Lines (moving from radial 11kV network to a ring or meshed
network), Ring Feeder Switching, Differential protection, Generator Circuit Breakers and
Comms, Existing RE generator tuning, power quality metering.
 Phase B: Western Ring Feeder Switching, Generator Circuit Breakers and Comms, Eastern
Ring Re-conductor, SCADA upgrade/replacement, Tune Voltage support controls, Bulk
energy storage (Vaini or Popua 1.3 MW, 2 MWh), capacitor banks.
 Phase C: Generator Circuit breakers and Comms, capacitor banks.
Once a ring philosophy is adopted it will provide adequate power quality and reliability
particularly through improved fault clearance times which most renewable generation plant can
ride through if certain generation connections requirements are followed. The network’s
reliability will also improve overall as feeder faults will no longer result in the loss of all load on
that feeder. The real benefit is that the network will be able to absorb renewable energy and the
main challenge will be upskilling and up sourcing human resources to manage the changed
philosophy of asset operation and maintenance.
In total the enabling power systems (EPS) projects will cost an estimated $9 million. These
different phases of enabling projects require a significant amount of capacity building for TPL
operations staff. High intermittent renewable penetration levels (50% +) on grids the size of
Tongatapu’s is a very new concept, and for TPL to manage such a system will require TPL to
have very qualified and well trained personnel.
Solar PV Generation (4x1.3MW): Solar PV is the most proven form of renewable energy
electricity generation in the Kingdom of Tonga today. The Tongatapu electricity grid and power
system can manage the instantaneous loss of 1.3MW of generation due to a diesel generation
trip. If PV generation is limited to 1.3MW plants and dispersed geographically then fluctuations
caused by cloud impacts have less impact than a power plant trip and will therefore be
manageable. Each large scale (approximately 1MW) solar plant should be located at least 4km
from the nearest large scale solar plant and each solar plant should be smaller than 1.3 MW.
Total project costs are estimated at $24 million and it is expected that a 6 seniti/kWh tariff
reduction will be achieved.
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The potential locations for PV plants are shown in the map below.
Wind Farm Generation (3x2.2MW): Electricity generation using energy from wind is still
relatively unproven in Tonga, only two small wind turbines (11kW) have been installed and are
operational in the country. However comprehensive data collection and analysis has taken place
with numerous pre-feasibility studies being completed and now a full feasibility close to
completion. The latest studies show a relatively good wind resource averaging slightly more
than 7m/s at 30m to 50m heights.
It is highly recommended that an approximate balance between the total installed capacity of
wind and solar be maintained as much as possible as this achieved the highest levels of
renewable energy electricity productions shares. There are simple rules that guide the
introduction of wind turbine generators to the Tongatapu electricity grid, they must be pitch
regulated turbines with frequency governor and must NOT have a vertical cut out profile at high
wind speeds.
Total project costs are estimated at $60 million and it is expected that an 11 seniti/kWh tariff
reduction will be achieved.
The potential locations for Wind farms are shown in the map above.
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Bulk Energy Storage: Currently, TPL uses 16kWh (2x8kWh) small storage systems (i.e.
2x500KW designed to last for 60 seconds) only for the purpose of frequency and engine ramp
controls required to stabilize the system from the fluctuating 2.4MW solar PV pants (1MW plant
at Vaini + 1.4MW plant at Popua). However, current solar storage capacity is very minimal. Bulk
storage capacity is required to use for such functions as: correcting temporary load/generation
mismatches, regulating frequency, mitigating flicker, as a result of fluctuating RE sources and
assisting advanced islanding functions and service restoration.
The project investment cost is estimated at $19 million and consists of the following milestones:
 16 MWh of Energy Storage Capacity

 Battery Building Construction
 Battery System integration to SCADA and power management systems
Due to the falling costs of solar and energy storage, the line between implementing additional
solar, large battery storage or both is blurred. However what is clear is that all efforts should be
made to optimise the electricity produced from renewable energy sources. This means that
spilling or curtailing the output of renewable electricity generating plant is not an optimized
solution. Additionally, a system with only renewable energy generating plants of a significant
portion overall of the generation mix will cause network instability and power quality issues.
Given the falling costs of energy storage in particular it makes sense to plan to introduce bulk
energy storage as an enabler that will also optimize and translate the investment in renewable
energy generating plant to greater electricity tariff reductions.
7.2 Projects In-Progress
Currently, TPL is undertaking a $67 million worth projects as shown in the table below. Of the
$67 million, $16 million is contributed by TPL and $51 million are contributed by development
partners.
57
Target (T$) Source

Stage 1

stage.
Outer Islands Renewable Project cosists of both establising RE plants (550KW in

Project networks.
IT Virtual Environment & Virtual server development to provide high availability,

5 EPS 0.5m TPL
Disaster Recovery Project disaster recovery and data protection.
The system will provide improved governance, the ability

Enterprise Resource
6 EPS 2.0m TPL to cope with growth and diversification and facilitate cost
Planning Project
reductions.
Total= 14% 67m
The above projects are described briefly below:
Smart & Prepay Metering Project: The Smart Metering and Prepay Project deploys 3000
meters to the most disconnected customers and 500 three phase meters for industrial
customers plus network monitoring. TPL will offer the 3000 customers with a selection of post-
paid or the newly installed pre-paid service. The 500 meters will enable Tonga Power to
adequately monitor large industrial customers as well as monitor the electrical network.
The Smart Metering and Pre-pay infrastructure are provided by Agility CIS and Itron. It includes
three high end back-office systems, Itron’s Openway Headend system, Meter Data Management
(MDM) system, and the Pre-payment system. There is also a field area network (FAN) platform
which is a private Access Point Name (PAPN) provided by Digicel Tonga, Connected Grid Routers
(CGR) and Smart Meters manufactured by Itron.
The total cost of the project as planned is $4.1 million of which $401,368.95 has been spent as
at end of February 2016.
As shown in the table below, there are nine project milestones spreading over a 13 months
period covering deliverables by Agility CIS, Itron and Tonga Power. The project is expected to
be completed by September 2016.
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# Milestones Date
1 Contracts Agreement to Proceed Jul-15
2 Itron and Agility Design Approval Dec-15
3 Factory Acceptance Test approval Jan-16
4 System Delivery Mar-16
5 User Acceptance Testing May-16
6 Transitions and Handover Jun-16
7 Final Itron Deliverable Jul-16
8 2500 meter installations Aug-16
9 Project closure Aug-16
The Village Network Upgrade Project (TVNUP) Stage 2/3: Having completed the first 17
villages in Stage-1 for $11 million, an additional $32 million funding has been provided by NZ
MFAT for a new project to complete another 33 villages on Tongatapu. TPL contribution towards
the project is about $10 million. To date (March, 2016), 15 out of 33 villages have been
completed. The project provides an upgraded low voltage reticulation network and the service
line connections to each premise in the village. The project includes installation of over 5,370
LV poles, 1,330 HV poles, 215Km of LV cables, 118 transformers and 7,640 customer
connections. TPL’s responsibility is to provide the high voltage network and transformers which
in most cases are relocated to meet the location of the loads. New transformers are installed or
upgraded where power quality demands such works.
Tonga Police Solar Project: In order to reduce their annual electricity costs, Tonga Police has
initiated a third party solar (250KW) and storage facility (100kWh) in Tongatapu. The $2.5
million project is funded by the Australian Government. The project is in progress at the moment
and constructed by REID Technology Ltd. TPL has signed an agreement with Tonga Police to
purchase energy (about 324,674 kWh) from the PV plant at a certain rate complying with TPL’s
Gross Metering Project.
Outer Island Renewable Energy & Energy Efficiency Project: ADB has generously approved
a $16 million funding (with $600,000 TPL contribution) for installation of 550kW of solar with
660kWh storage on Ha’apai and 200kW of Solar on ‘Eua and fine tuning of existing TPL SCADA
system on Vava’u. This is called the “Phase 1” or “on-grid” scope. Phase 1 (on-grid) started in
February 2016 and will be completed in October 2016. The Project also comprise the
rehabilitation of the existing grid network through the replacement of electricity cables;
electricity poles; distribution transformers; switchgear and other associated grid network
equipment in Vava'u and 'Eua.
There is also a separate “Phase 2” or “off-grid” scope that contains 350kW PV with 670kWh of
storage spread across 4 Ha’apai outer island mini grids and the associated 4 mini-grid network
upgrades. In addition, a new mini-grid and centralised PV and diesel generation on
Niuatoputapu combined with 25kW of solar home systems on Niuafo’ou will be installed. The
Phase 2 (off-grid) will be started in January 2017 and completed in January 2018.
IT Virtual Environment & Disaster Recovery Project: The proposed new IT architecture
includes a SAN (Storage Area Network) Server connecting to three other physical servers.
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These three physical servers hold ten virtual servers which represents TPL’s all application
servers (e.g. Orion, email, SCADA, IMS/HR, ERP, SMS servers, etc.) This architecture enables high
availability where if one physical server fails, the two other physical servers pick up the
application servers instantly in the virtual environment.
A similar system will be duplicated at the Distribution Centre or at the Popua Power Station as
a disaster recovery solution. If both head office and DR sites were destroyed in case of a disaster,
the applications will be made accessible from the cloud.
Enterprise Resource Planning Project: ERP system’s database integrates and unifies
information from different business units enabling a single source of truth which is the
foundation for business intelligence (BI) and analytics. In other words, The ERP system
integrates and automates internal and external information across all the business units and
functions embracing procurement, inventory management, finance & accounting, billing &
revenue collection, payroll, human resources management, customer relationship management,
and project management. The system will provide improved governance, the ability to cope with
growth and diversification and facilitate cost reductions.
The budget for this project is $1.915 million. The project was officially kick off at the end of
March 2016, and work on site will begin in late April. All modules are expected to be live by the
end of the calendar year.
7.3 Future Project Committed by TPL
In addition to the projects that are currently work in-progress above, TPL is committed to
undertake a further $19 million worth of projects during the planning period as shown in the
table below.
Future Projects Committed by TPL

Target (T$) Source
Generator Replacement Replacing or overhauling all CAT and Cummins generators

1 EPS 9.0m TPL
Program (All Islands) in Tongatapu and Outer Islands
Outer Islands Network

2 Upgrade Program (Vavau EPS 3.0m TPL Network upgrade work left over from OIREP project.
& Eua)
Tongatapu Village Network upgrade work (about 5 more villages) left over
3 EPS 3.0m TPL
Network Upgrade - Stage 4 from TVNUP and Nuku'alofa Network Upgrade Projects .
Smart Metering Project -

4 EPS 3.0m TPL Installation of balance 14,000 smart meters in Tongatapu.
Stage 2
Other ancillary generation projects including SCADA
5 Generation (Other) EPS 2.0m upgrade, fire hydrants, G8 day tank, MAK/G8 load sharing
module, waste oil disposal system etc.
Total= Nil 20m
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Generator Replacement Program: One of the major projects TPL plans to complete during the
next five years is the retirement or full refurbishment of six 1.4MW CAT generators in Tongatapu
as they have approached the end of their useful live. The major objective of the asset
replacement program is to provide uninterrupted supply to consumers whilst maintaining N-1
security of supply. Phasing out old generators and installing new generators will be completed
in several stages, being conscious of timing and implementation of renewable energy projects.
On Tongatapu, the first CAT generator was retired in 2015 and replaced with a 2.8MW MAK
generator which was commissioned in December, 2015. Two more CAT generators will be
retired in 2016 (subject to demand growth and the effects of any renewable generation
investment) and replaced with a one 2.2MW CAT generator. Another two CAT generators will
be retired after 2016. In 2018 (or shortly after), one more CAT generator will be retired and
replaced with another 2.2MW CAT generator. In 2020, the last CAT generator will be retired and
replaced with another 2.2MW CAT generator. The timing and nature of replacements will
depend largely on the availability of grant funded renewable projects. In the interim, TPL has
assumed that diesel generators will be required to provide security for the network including
spinning reserve for RE. In the future battery storage will have an increasing impact on the
generation fleet.
Demand growth is not expected to be significant in the outer island grids, hence generator
replacement at these locations will largely follow end of life patterns. The replacement
generation will be optimised around any renewable generation as opportunities arise.
The total cost of the asset replacement and improvement program has been estimated at $9
million for the next five year period across all four island groups.
Outer Islands Network Upgrade Project – Stage 2: The Ha’apai network upgrade has been
100% completed under the Ha’apai Cyclone Ian Recovery Project. However, Vava’u and ‘Eua
network upgrades are not fully completed yet. The ADB funded Outer Island Network Upgrade
Project only upgrades 40% of Vava’u’s Network and 75% of ‘Eua’s Network. The balance of 60%
of Vava’u’s distribution network and 25% of ‘Eua’s upgrade will be completed under this project.
Project costs for the Vava’u upgrade is estimated at $2 million and ‘Eua upgrade at $1 million.
Project scope for the Vava’u Upgrade include replacement of HV poles, HV/LV network
equipment and service lines. The project ensures enhanced public safety, reduced system
losses and reliability of supply.
Tongatapu Village Upgrade Project – Stage 4: The New Zealand Government funded TVNUP
project discussed above completes 70% of the Tongatapu distribution network upgrade. In
addition, Nuku’alofa Network Upgrade project completes about 25% of the Tongatapu network.
However, there is still 5% of the total Tongatapu network is left out from being upgraded. These
are five remote villages where a small number of customers reside. Under the Stage-4 project,
TPL intends to upgrade both HV and LV networks of these five villages at TPL’s own cost of about
$3 million.
Smart Metering Project – Stage 2: The smart metering project discussed above only manages
installation of 3,000 prepay meters and respective radio-mesh and head-end communication
systems. However, there are about 17,000 customers residing in Tongatapu. The Stage-2 of the
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project manages installation of the balance or 14,000 smart meters. The project cost is expected
to be about $3 million.
Generation (Other) Projects: In addition to the generator replacement plan discussed above,
the following auxiliary systems will be dealt with during the planning period. The allocated
budget for the work is about $2 million.
 Repairing MAK/CAT Load sharing communication module

 Replacing new flow meters to improve fuel reconciliation
 Installation of a separate Day Tank for G8
 Installation of lagging CAT exhaust pipe
 Painting Power Station piping
 Attending to sea water cooling pump improvements
 Installation of additional over-speed protection device (air-flap)
 Laying DC underground cables in conduits
 Procuring a waste oil disposal system (boiler/steam engine)
 Procuring the Hired Generator
 Upgrading SCADA in all three outer island and enable communications between outer
islands and Tongatapu
 Replacement of station transformers
 Repairing MAK gantry crane in the oil power house
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Utility Reform Project:
As part of the Tongan government’s ongoing restructuring and reform programe to improve
operational efficiency and profitability, Tonga Power Ltd, Waste Authority Ltd and Tonga Water
Board combined Board have established the steps in the table below (Utilities Reform Status
Update) which will be implemented in stages as key milestones towards achieving the
shareholders expectation for the Combined Utility Companies reform programme.
It is further anticipated that this reform will reduce up to 10% of annual costs and enhance
service delivery (e.g. on-time delivery, safety & quality).
Utilities Reform Status Update

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17Status
•Common building facilities to house all three
utilities (by December 2016) 50% Complete
•Common bil ing (TPL & WAL Bil ing May 2016,
TPL/WAL/TWB by December 2016) 75% Complete
•Joint meter reading in vil ages (August 2016) 80% Complete
•Common IT service (December 2016) 40% Complete
•Shared recruitment, inter-company staf
movement, training & development (December
2016) 20% Complete
•Common vehicle management (maintenance,
fuel) – (December 2016) 50% Complete
•Combined procurement (March 2017) 40% Complete
•Common secretariat to the board (May 2016) 100% Complete
•Common tarif (fuel & non-fuel components)
(March 2017) 60% Complete
•Additional payment collection outlets in far east &
west to receive TPL/WAL payments 50% Complete
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8. PERFORMANCE MEASURES & TARGETS
The effectiveness of the strategic objectives will be measured on an annual basis and compare
with the actual values against the annual targets shown in the table below. The variances
between the actual and target values will be used to review and update the Business Plan in the
next year.
Strategic Performance Targets for the Planning Period 2017 -2020

Current Targets
ID Strategic Objective Strategic Measures Business Unit
2015 2016 2017 2018 2019 2020
Achieving 50% electricity generation from RE Accumulated Fuel Displacement (%) Generation 9% 12% 20% 30% 40% 50%
generation by 2020 in order to achieve the
1 Tariff Reduction (%) due to RE Generation 3% 4% 5% 8% 10% 12%
government TERM objective and significant
tariff reductions. RE Penetration (%) Generation 9% 15% 25% 40% 50% 60%
Adopting technologies to manage the Voltage Fluctuations Distribution +/-10% +/-10% +/-10% +/-10% +/-10% +/-10%
2 complexities arising from increasing RE
penetration. Frequency Fluctuation Generation 0% 0% 0% 0% 0% 0%
System Loss (%) Distribution 12.0% 12% 11% 11% 10% 10%
Fuel Efficiency (kWh/L) Generation 4.0 4.0 4.0 4.0 4.0 4.0
Distribution &
Reliability (SAIDI) (Minutes) 1100 1000 950 925 900 850
Generation
Distribution &
Number of outages (SAIFI) 5 4 4 3 3 3
Generation
Reduction in Maintenance Cost (%) Generation 5% 5% 5% 5% 5% 5%
Reduction in Material Cost (%) Distribution 5% 5% 5% 5% 5% 5%
Improving the network and replacing ageing
3 assets to improve safety and reliability of TPL's Load factor (%) Generation 62% 58% 59% 54% 54% 54%
services. N-1 Security Policy Compliance Generation 100% 100% 100% 100% 100% 100%
Rework Cost (TOP$)/Annum Distribution < 5,000 < 5,000 < 5,000 < 5,000 < 5,000 < 5,000
Capex Jobs Audited/Annum (%) Distribution >80% >80% >80% >80% >80% >80%
Firm Installed Capacity (KW) Generation 15236 15410 16270 16444 16416 17276
Installed Capacity (KW) (All Sources) Generation 18142 18316 21376 21550 21522 22382
Data Quality in File Maker (%) Distribution 100% 100% 100% 100% 100% 100%
Distribution &
Update Asset Management Plans YES YES YES YES YES YES
Generation
Incident Rate Corporate < 10 < 10 <9 <9 <8 <8
Loss Time Injuries Corporate 0 0 0 0 0 0
Cultivating a hazard free safety culture to Number of Incident Reports Corporate 100 125 140 150 160 175
4 minimize any electrical hazards to both public Safety Awareness Activities/Annum Corporate 3 3 3 3 3 3
and staff. Safety Committee Meeting
Corporate 100% 100% 100% 100% 100% 100%
Attendance
Number of Emergency Drills/Annum Corporate 2 2 2 2 2 2
Staff Retention (%) Corporate > 90% > 90% > 90% > 90% > 90% > 90%
Customer Complaints Corporate 60 50 40 30 30 20
Exercise BCM Plan/Annum Corporate 1 1 1 1 1 1
Investing in excellent business processes and Number internal audits/Annum Corporate 3 3 3 3 3 3
systems in order to improve operational
5 Compliance with Company Policies Corporate 100% 100% 100% 100% 100% 100%
efficiency and quality of TPL's services to
customers. Compliance with ECC & Applicable
Corporate 100% 100% 100% 100% 100% 100%
Legislation
Staff Training Register Corporate > 90% > 90% > 90% > 90% > 90% > 90%
Staff Absenteeism (%) Corporate < 5% < 5% < 5% < 5% < 5% < 5%
Revenue Retail $36.8M $37.9M $36.8M $37.1M $36.7M $37.6M
NPAT Retail $3.1M $3.3M $3.4M $3.4M $3.4M $3.5M
Managing all external funding and internal Debt Ratio Retail < 50% < 50% < 50% < 50% < 50% < 50%
6 financing sources successfully in order to ROE Retail 10% 10% 10% 10% 10% 10%
maximise the shareholder value. Debtor Days Retail 20 20 20 20 20 20
Liquidity Ratio Retail 1.5 1.5 1.5 1.5 1.5 1.5
Opex Reduction (%) Retail 3% 3% 3% 3% 3% 3%
64
9. STATEMENT OF COMPLIANCE(S)
Statement of compliance with relevant Government Policies:
Electricity Act: All requirements including payment of regulatory fees and other levies, offences,
Concession Contract etc. are met.
Electricity Concession Contract: TPL complies with all the reporting requirements, efficiency,
technical and services standards sets forth in the Concession Contract II effective September
2015 except for voltage standards. There are occasional situations where the 230V (-/+10%)
standard is not met due to the poor state of the network equipment (e.g. transformers) in some
areas of the network.
Ministry of Public Enterprise Act: All the requirements including reporting requirements,
directors’ requirements, Board meeting requirements, and auditing requirements are met.
Companies Act: All the requirements including constitution, share register, shareholder rights,
directors’ duty of care, disclosure interest, keeping accounting records, appointment of auditors,
annual report, and annual return requirements are met.
Pursuant to Section 18 (4) (j) of the Act, the following matters have been agreed with the
Responsible Minister:
 Corporate governance: The company is committed to the highest standards of corporate

governance, with core values of accountability, probity and transparency. The company
is adopting policies and procedures aimed at maintaining these standards.
 Anti-corruption: The Board, through the Chief Executive will ensure compliance by the
company with statutory and regulatory requirements including avoidance of any act that
would or could be construed as an illegal, corrupt or unethical practice.
 Share subscriptions or purchases: Subscriptions for shares in any company or acquisition
of interests in any other organisation that involve equity investment will be subject to
prior consultation with the Responsible Minister.
 Subsidiary companies: The establishment of subsidiary companies or sale of material
interest in or assets of subsidiary companies will be subject to prior consultation with
the Responsible Minister.
Other legislation requirements to which TPL complies with are: Renewable energy Act, Business
licenses Act, Public audit Act, Public health Act, National retirement benefit Scheme, Price and
wage control Act, Anti-corruption commissioner Act, and Public finance management Act.
65
Statement of Community Services, claims for GPO
TPL has spearheaded the implementation of projects that align with the following GPO.
Under the TSDF: Outcome Objective 3 (11) – Maintaining and where possible expanding the
provision of reliable and cost efficient power supplies, using traditional and renewable options,
to all communities. The results to date, a 12% system losses down from 18% in 2010, Average
total duration of power interruption per customer down to 88 minutes from 299 in 2011 and
8% of energy coming from renewable energy source in 2015.
Outcome Objective 5 – Appropriately skilled workforce to meet the available opportunities in

Tonga and overseas. The TVNUP project up skills TPL lines staff to an internationally recognized
standard of line mechanic. The results to date, 10 lines staff have been recruited by overseas
company to help satisfy opportunities that are available there for skilled lines staff.
Enabling Theme C – Ensuring Public Enterprises are sustainable and accountable, and where
appropriate moved into the private sector.
Under the NIIP: Priority projects E11 and E16 – Results to date, a 1.2MW of Solar PV have been
added on Tongatapu with support of JICA, Outer Islands On-Grid RE funded committed with
procurement of EPC contractor underway.
Under TERM: Minimizing the need for imported fuels by transitioning to a renewable energy
based system. Seeking to achieve greater efficiencies in customer use and distribution through
improving network efficiency and energy efficiency awareness campaigns.
Specific GPO: Lifeline Tariff – TPL is currently a lifeline tariff program for customer who uses less
then 50kWhrs per month under GoT GPO.
Suggested GPO: Potentially a GPO should be considered for if TPL are to take – over maintenance
of off-grid island generation schemes i.e. Diesel mini-grids and Solar Home Systems.
66
Statement of Support from Government and/or Development Partners
Target (T$) Source

Stage 1

stage.
Outer Islands Renewable Project consists of both establishing RE plants (550KW in

Project networks.
Currently, donor support is available for the projects shown in the above table. These projects
are in progress at the moment. The donor funds for the future priority projects have not been
confirmed yet.
Statements of Financial capacity in regard to dividends
TPL’s dividend policy is that 35% of Net Profit After Tax is paid as dividend to the government.
However, TPL has paid a special dividend of $2 million in the year 2015. As shown in the
following table, the estimated dividend stream for the next five years will be $1.5M (2016),
$1.5M (2017), $1.5M (2018), $1.6(2019) and $1.7M (2020).
Dividend Forecast 2015-2020 (millions)

2016 2017 2018 2019 2020
EBITDA 11.4 13.3 14.7 15.5 16.7
Add change in working capital 7.7 -0.5 5.6 4.5 -1.6
Add Long-term Debt 6 6 0 1.11 3
25.1 18.8 20.3 21.11 18.1
Less interest -1 -1.1 -1.1 -1 -1
Less income tax -1.2 -1.4 -1.5 -1.5 -1.6
Less Capex -14.2 -9.4 -11.4 -8.4 -9.9
Less Long-term Debt -4.2 -4.8 -5 -5 -5
-20.6 -16.7 -19 -15.9 -17.5
Retained Earnings 4.5 2.1 1.3 5.21 0.6
Provision for Dividend -1.5 -1.5 -1.5 -1.6 -1.7
Net Cash Balance 3.0 0.6 -0.2 3.61 -1.1
Opening Cash 1.0 4.0 4.6 4.4 8.0
Cash at Year End 4.0 4.6 4.4 8.0 6.9
NPAT 3.5 4.3 4.4 4.5 4.9

Dividend (% of NPAT) 43% 35% 34% 36% 35%
67
10. FINANCIAL FORECAST
10.1 Profitability
2017 2018 2019 2020 2021
1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun
Total Revenue 36,807,700 37,186,916 36,715,303 37,601,288 38,508,378
Total Expenses 24,051,917 24,007,977 23,210,258 23,691,183 24,048,992
EBITA 12,755,783 13,178,938 13,505,045 13,910,105 14,459,386
Depreciation 6,930,372 7,382,128 7,882,324 8,188,636 8,688,978
Interest 1,175,630 1,231,731 1,152,080 1,083,492 875,976
Income Tax 1,162,445 1,141,270 1,117,660 1,159,494 1,223,608
NPAT 3,487,336 3,423,809 3,352,980 3,478,482 3,670,824
Variance -1.8% -2.1% 3.7% 5.5%
TPL is expecting to achieve a net profit after tax of $3.5 million at the end of the 2017 financial year.
Profitability level of the company is stabilised as it is projected that the company will continue to be
profitable in the years to follow. NPAT is expected to decrease by 0.06 million/1.8% in 2017.
Furthermore, TPL is expected yield 10% Return on Shareholder’s Fund at the end 2017 financial year
Total revenue is forecasted to be at $36.8 million at the end of 2017 and is expected to increase
steadily by 1% from 2018 onward.
Total expenses is expected to remain generally stable at 24 million from 2017 to 2021.
Even though TPL is proposing a dividend of 35% of its Net Profit after Tax, the final amount will always
be negotiated between the TPL Board and the Minister at end of each financial year. The estimated
dividend for 2017 financial year will be $1,200,000. The previous year’s dividend was 105% of NPAT
which was equated to $1,318 payout for each ordinary share issued.
68
10.2 Liquidity
2017 2018 2019 2020 2021
1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun
Projection T$m T$m T$m T$m T$m

Net Cash From
Operations 11,562,260 11,308,218 11,453,706 12,600,459 13,599,141
Current Ratio 1.2 1.4 1.5 1.3 1.5
Liquidity Ratio 1.1 1.3 1.4 1.2 1.4
Liquidity position of the company is at a satisfactory level at around $1.2 to cover $1 current
liabilities. It is expected to improve slightly in subsequent years. Liquidity Ratio is above 1.1
sufficient to cover its short term debt as they falls due.
10.3 Stability
2017 2018 2019 2020 2021
Projection 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun 1 Jul-30 Jun
T$m T$m T$m T$m T$m

Debt ratio (= Total
Debt/Total Assets) 0.33 0.33 0.31 0.29 0.26
Gearing ratio (=
Longterm Debt/Total
Equity) 0.37 0.36 0.32 0.29 0.23
Debt to equity ratio
(=Total Liability/ Total
Equity) 0.50 0.49 0.45 0.42 0.35
Interest Cover Ratio (=
EBIT/ Interest Expense) 10.85 10.70 11.72 12.84 16.51
TPL is projecting debt to be 33 cents of every dollar of its assets in 2017 financial year, and will
generally decrease over the years. Debt to equity ratio will remain generally decrease from 50% to
35% throughout the 5 years. Times interest earned ratio shows adequate cover for the entire
period 2017 – 2021.
The main causing factor is that TPL is projecting to invest in Renewal Energy Projects in addition to
its commitments from Generation, Distribution and Retailing operations.
69
Pro Forma Financial Statements for Tonga Power Limited
Table 1 Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Millions of pa'anga 1 Jul-30 Jun 1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun1 Jul-30 Jun
T$m T$m T$m T$m T$m T$m T$m T$m T$m T$m
Statement of Financial Performance
Revenue
Fuel 12.9 13.2 13.6 13.9 14.2 14.5 14.9 15.2 15.6 16.0
Savings from Renewables -1.9 -1.9 -3.2 -3.2 -3.2 -3.2 -3.2 -3.2 -3.2 -3.2
Net Fuel Revenue 11.1 11.4 10.3 10.7 11.0 11.3 11.7 12.0 12.4 12.8
Non-fuel 22.1 22.1 22.7 23.2 23.7 24.3 24.9 25.5 26.1 26.7
Other revenue 3.7 3.7 3.7 3.7 3.8 3.8 3.8 3.9 3.9 3.9
Total Revenue 36.8 37.2 36.7 37.6 38.5 39.4 40.4 41.4 42.4 43.4
Expenses
Fuel 11.1 11.4 10.3 10.7 11.0 11.3 11.7 12.0 12.4 12.8
Renewables costs 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Non-fuel
Repairs & maintenance 2.2 1.9 2.0 1.9 1.8 2.1 1.7 1.8 1.8 1.8
Salary & wages 4.5 4.6 4.6 4.7 4.9 5.0 5.0 5.1 5.1 5.2
Materials 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5
Operating overhead 1.9 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.2 2.2
Administration 3.7 3.6 3.6 3.7 3.6 3.6 3.7 3.7 3.8 3.7
Bad debt 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Total non-fuel expense 12.9 12.5 12.7 12.9 12.9 13.4 13.1 13.2 13.5 13.5
Total expense 24.1 24.0 23.2 23.7 24.0 24.8 24.9 25.4 26.0 26.4
EBITDA 12.8 13.2 13.5 13.9 14.5 14.6 15.5 16.0 16.4 17.0
Depreciation 6.9 7.4 7.9 8.2 8.7 9.1 9.4 9.8 10.3 10.8
Interest 1.2 1.2 1.2 1.1 0.9 0.7 0.6 0.4 0.2 0.2
Net profit before tax 4.6 4.6 4.5 4.6 4.9 4.9 5.6 5.7 5.8 6.0
Income tax 1.2 1.1 1.1 1.2 1.2 1.2 1.4 1.4 1.5 1.5
Net profit after tax 3.5 3.4 3.4 3.5 3.7 3.6 4.2 4.3 4.4 4.5
Provision for dividend 1.2 1.2 1.2 1.2 1.3 1.3 1.5 1.5 1.5 1.6
Transfer to retained earnings 2.3 2.2 2.2 2.3 2.4 2.4 2.7 2.8 2.8 2.9
70
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Table 2 Statement of Financial Position
Current assets
Accounts receivable & Other Receivables 7.0 7.1 7.2 7.4 7.6 7.8 8.0 8.1 8.3 8.5
Inventory 0.9 0.9 0.9 0.9 0.9 1.0 1.0 1.0 1.0 1.1
Cash 1.3 1.7 1.3 1.2 0.8 1.8 2.6 1.0 2.5 2.7
Short Term Investments 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Total current assets 13.2 12.7 12.4 12.5 12.3 13.6 14.6 13.1 14.9 15.3
Current liabilities
Accounts payable & Other Payables 4.7 4.8 4.9 5.0 5.1 5.2 5.3 5.5 5.6 5.7
Current portion of term debt 5.7 5.9 6.0 6.0 5.4 4.5 4.5 4.5 4.0 1.8
Total current liabilities 10.5 10.7 10.8 11.0 10.5 9.7 9.8 10.0 9.6 7.5
Net working capital employed 2.7 2.0 1.6 1.6 1.8 3.8 4.7 3.2 5.3 7.8
Term assets
Opening fixed assets 99.2 106.0 109.4 109.2 109.7 107.6 104.2 104.0 103.9 101.7
Capital expenditure 13.8 10.8 7.6 8.8 6.5 5.7 9.1 9.8 8.1 13.0
Depreciation 6.9 7.4 7.9 8.2 8.7 9.1 9.4 9.8 10.3 10.8
Fixed assets 106.0 109.4 109.2 109.7 107.6 104.2 104.0 103.9 101.7 103.8
Total term assets 106.0 109.4 109.2 109.7 107.6 104.2 104.0 103.9 101.7 103.8
Non current liabilities
Debt 22.0 22.3 19.6 17.7 13.2 9.4 7.1 2.5 -0.7 0.8
Deferred Tax Liability 7.2 7.3 7.2 7.4 7.5 7.7 7.9 8.1 8.3 8.5
Total Non Current liabilities 29.2 29.6 26.8 25.1 20.7 17.1 15.1 10.6 7.6 9.3
Net assets 79.5 81.8 84.0 86.2 88.6 91.0 93.7 96.5 99.3 102.2
71
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Table 3 Statement of Movements in Equity
Net Assets 79.5 81.8 84.0 86.2 88.6 91.0 93.7 96.5 99.3 102.2
Represented by:
Opening share capital 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8
Change in working capital 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Share capital at year end 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8
Opening retained earnings 15.0 17.3 19.5 21.7 23.9 26.3 28.7 31.4 34.2 37.0
Transfers to retained earnings 2.3 2.2 2.2 2.3 2.4 2.4 2.7 2.8 2.8 2.9
Retained earnings at year end 17.3 19.5 21.7 23.9 26.3 28.7 31.4 34.2 37.0 40.0
Assets revaluation reserve 28.5 28.5 28.5 28.5 28.5 28.5 28.5 28.5 28.5 28.5
Shareholders' equity 79.5 81.8 84.0 86.2 88.6 91.0 93.7 96.5 99.3 102.2
72
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Table 4 Statement of Cash Flows
Cash from operating activities 2.3 2.2 2.2 2.3 2.4 2.4 2.7 2.8 2.8 2.9
Adjusted by:
Depreciation 6.9 7.4 7.9 8.2 8.7 9.1 9.4 9.8 10.3 10.8
Change in working capital 4.6 2.5 0.1 1.2 0.5 -0.1 -0.6 0.0 0.4 -1.8
Increase in Term Investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Cash from operations 13.8 12.1 10.1 11.7 11.6 11.3 11.5 12.6 13.6 11.9
Long term assets
Cash from (used by) long term assets -13.8 -10.8 -7.6 -8.8 -6.5 -5.7 -9.1 -9.8 -8.1 -13.0
Long term liabilities
Incr in long term debt 5.0 5.0 3.0 3.0 0.0 0.0 3.0 0.0 0.0 3.0
Decr in long term debt -5.7 -5.9 -6.0 -6.0 -5.4 -4.5 -4.5 -4.5 -4.0 -1.8
Incr (decr) in capital 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash from (used by) liabilities and capital -0.7 -0.9 -3.0 -3.0 -5.4 -4.5 -1.5 -4.5 -4.0 1.2
Net incr (decr) in cash -0.7 0.4 -0.4 -0.1 -0.4 1.1 0.8 -1.7 1.5 0.2
Opening cash 2.0 1.3 1.7 1.3 1.2 0.8 1.8 2.6 1.0 2.5
Cash at year end 1.3 1.7 1.3 1.2 0.8 1.8 2.6 1.0 2.5 2.7
Draft Budget 25/4/2016
73
KEY PERFORMANCE INDICATORS
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Returns to shareholders (%)
Return on Assets (EBITDA/Total Assets) 11% 11% 11% 11% 12% 12% 13% 14% 14% 14%
Return on Assets (NPAT/Total Assets) 3% 3% 3% 3% 3% 3% 4% 4% 4% 4%
Return on Equity (NPAT/Equity) 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
Return on Shareholder's Funds ( Net Profit/Share 10% 10% 10% 10% 11% 11% 12% 13% 13% 13%
Capital)
Profitability (%)
Rate of Return (NPAT/Sales) 6% 6% 6% 6% 6% 6% 7% 7% 7% 7%
Capital structure (%)
Loan Finance Only [Loan/Total Liabilities] 70% 70% 68% 66% 60% 52% 47% 34% 19% 16%
Loan Finance as a % of Sources of Funds [Loan/ 23% 23% 21% 19% 16% 12% 10% 6% 3% 2%
(Liabilities + Equity)]
Debt Ratio [Debt/ (Debt+Equity)] 33% 33% 31% 29% 26% 23% 21% 18% 15% 14%
Year ending 30 June (TOP $m) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Forecast dividend (T$m) 1.2 1.2 1.2 1.2 1.3 1.3 5.6 10.1 14.6 19.6
Dividend as % of NPAT (%) 35% 35% 35% 35% 35% 35% 135% 235% 335% 435%
Six weeks of normal operating & debt service expense (T$m)
0.8 0.8 0.8 0.8 0.7 1.2 1.1 0.9 0.7 0.4
Capital structure (%)
Debt Ratio [Debt/ (Debt+Equity)] 33% 33% 31% 29% 26% 23% 21% 18% 15% 14%
Interest cover (X)
EBIT/interest 5.0 4.7 4.9 5.3 6.6 8.3 10.9 15.4 26.2 32.5
Installation and Maintenance of Street Lighting 0.6 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Capital Expenditure 0.8 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Operating Expenditure 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
74
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Customer service levels
Meets 2015 Concession Contract requirements TO MEET TO MEET TO MEET TO MEET TO MEET TO MEET TO MEET TO MEET TO MEET TO MEET
Available capacity
- INSTALLED CAPACITY (FIRM CAPACITY ONLY) 17116 17116 16970 17670 17670 17670 17670 17670 17670 17670
- INSTALLED CAPACITY (INCL AS AVAILABLE
SOURCES) 20716 22716 24950 27980 27980 27980 27980 27980 27980 27980
Generating capacity utilisation
Load factor (%) 56% - 61% 35% - 62% 36% - 60% 37% - 61% 38% - 62% 40% - 64% 40% - 64% 40% - 64% 40% - 64% 40% - 64%
Distribution efficiency1,2
Line loss (%) 11% 11% 10% 10% 9% 9% 9% 9% 9% 9%
Efficiency of generation1,3
KwH Generated per Litre of Fuel (L) 4.15 4.13 3.95 3.95 3.95 3.95 3.95 3.95 3.95 3.95
75
Pro Forma Consolidated Financial Statements for Tonga Power Limited and Subsidiaries
Table 1 Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Statement of Financial Performance
Revenue
Fuel 12.9 13.2 13.6 13.9 14.2 14.5 14.9 15.2 15.6 16.0
Savings from Renewables -1.9 -1.9 -3.2 -3.2 -3.2 -3.2 -3.2 -3.2 -3.2 -3.2
Net Fuel Revenue 11.1 11.4 10.3 10.7 11.0 11.3 11.7 12.0 12.4 12.8
Non-fuel 22.1 22.1 22.7 23.2 23.7 24.3 24.9 25.5 26.1 26.7
Other revenue 3.7 3.7 3.7 3.7 3.8 3.8 3.8 3.9 3.9 3.9
Gas Revenue 7.2 7.3 7.3 7.4 7.5 7.6 7.6 7.7 7.8 7.9
Total Revenue 44.0 44.5 44.1 45.0 46.0 47.0 48.0 49.1 50.2 51.3
Expenses
Fuel 11.1 11.4 10.3 10.7 11.0 11.3 11.7 12.0 12.4 12.8
Renewables costs 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Non-fuel
Repairs & maintenance 2.2 1.9 2.0 1.9 1.8 2.1 1.7 1.8 1.8 1.8
Salary & wages 4.5 4.6 4.6 4.7 4.9 5.0 5.0 5.1 5.1 5.2
Materials 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5
Operating overhead 1.9 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.2 2.2
Administration 3.7 3.6 3.6 3.7 3.6 3.6 3.7 3.7 3.8 3.7
Bad debt 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Total non-fuel expense 12.9 12.5 12.7 12.9 12.9 13.4 13.1 13.2 13.5 13.5
Gas Expenses 6.5 6.6 6.6 6.7 6.8 6.8 6.9 7.0 7.0 7.1
Total expense 30.6 30.6 29.8 30.4 30.8 31.7 31.8 32.3 33.0 33.5
EBITDA 13.5 13.9 14.2 14.6 15.2 15.3 16.2 16.7 17.1 17.8
Depreciation 7.2 7.7 8.2 8.5 9.0 9.4 9.7 10.1 10.6 11.1
Interest 1.3 1.3 1.3 1.2 1.0 0.8 0.7 0.5 0.3 0.3
Net profit before tax 4.9 4.9 4.8 5.0 5.2 5.2 5.9 6.1 6.2 6.4
Income tax 1.2 1.2 1.2 1.2 1.3 1.3 1.5 1.5 1.5 1.6
Net profit after tax 3.7 3.7 3.6 3.7 3.9 3.9 4.4 4.6 4.6 4.8
Provision for dividend 1.3 1.3 1.3 1.3 1.4 1.4 1.6 1.6 1.6 1.7
Transfer to retained earnings 2.4 2.4 2.3 2.4 2.5 2.5 2.9 3.0 3.0 3.1
76
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Table 2 Statement of Financial Position
Current assets
Accounts receivable & Other Receivables 7.0 7.1 7.2 7.4 7.6 7.8 8.0 8.1 8.3 8.5
Inventory 0.9 0.9 0.9 0.9 0.9 1.0 1.0 1.0 1.0 1.1
Cash 3.0 5.9 5.9 6.3 6.4 7.9 9.2 8.0 10.0 10.6
Short Term Investments 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Gas current assets 2.9 2.9 3.0 3.0 3.0 3.0 3.1 3.1 3.1 3.2
Total current assets 17.8 19.8 20.0 20.6 20.9 22.7 24.2 23.3 25.5 26.4
Current liabilities
Accounts payable & Other Payables 4.7 4.8 4.9 5.0 5.1 5.2 5.3 5.5 5.6 5.7
Current portion of term debt 5.7 5.9 6.0 6.0 5.4 4.5 4.5 4.5 4.0 1.8
Gas current liabilities 2.1 2.1 2.1 2.2 2.2 2.2 2.2 2.3 2.3 2.3
Total current liabilities 12.6 12.8 13.0 13.1 12.7 11.9 12.1 12.2 11.9 9.8
Net working capital employed 5.3 7.0 7.0 7.5 8.2 10.8 12.1 11.0 13.6 16.6
Term assets
Opening fixed assets 99.2 105.7 108.8 108.3 108.5 106.1 102.4 101.9 101.5 99.0
Capital expenditure 13.8 10.8 7.6 8.8 6.5 5.7 9.1 9.8 8.1 13.0
Depreciation 7.2 7.7 8.2 8.5 9.0 9.4 9.7 10.1 10.6 11.1
Fixed assets 105.7 108.8 108.3 108.5 106.1 102.4 101.9 101.5 99.0 100.8
Gas capital expenditure 2.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Total term assets 108.0 109.1 108.6 108.8 106.4 102.7 102.2 101.8 99.3 101.1
Non current liabilities
Debt 22.0 22.3 19.6 17.7 13.2 9.4 7.1 2.5 -0.7 0.8
Deferred Tax Liability 8.6 8.7 8.6 8.8 9.0 9.2 9.4 9.6 9.8 10.0
Total Non Current liabilities 30.6 31.0 28.2 26.5 22.2 18.6 16.6 12.1 9.1 10.9
Net assets 82.7 85.1 87.4 89.8 92.4 94.9 97.8 100.7 103.8 106.9
77
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Table 3 Statement of Movements in Equity
Net Assets 82.7 85.1 87.4 89.8 92.4 94.9 97.8 100.7 103.8 106.9
Represented by:
Opening share capital 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7
Change in working capital 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Share capital at year end 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7
Opening retained earnings 16.1 18.5 20.9 23.2 25.6 28.2 30.7 33.6 36.6 39.6
Transfers to retained earnings 2.4 2.4 2.3 2.4 2.5 2.5 2.9 3.0 3.0 3.1
Retained earnings at year end 18.5 20.9 23.2 25.6 28.2 30.7 33.6 36.6 39.6 42.7
Assets revaluation reserve 28.5 28.5 28.5 28.5 28.5 28.5 28.5 28.5 28.5 28.5
Shareholders' equity 82.7 85.1 87.4 89.8 92.4 94.9 97.8 100.7 103.8 106.9
78
Year ending 30 June 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Table 4 Statement of Cash Flows
Cash from operating activities 2.4 2.4 2.3 2.4 2.5 2.5 2.9 3.0 3.0 3.1
Adjusted by:
Depreciation 7.2 7.7 8.2 8.5 9.0 9.4 9.7 10.1 10.6 11.1
Change in working capital 5.2 4.8 0.4 1.5 0.8 0.2 -0.3 0.3 0.7 -1.5
Increase in Term Investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Cash from operations 14.8 14.9 10.9 12.4 12.3 12.1 12.2 13.4 14.4 12.7
Long term assets
Cash from (used by) long term assets -16.1 -11.1 -7.9 -9.1 -6.8 -6.0 -9.4 -10.1 -8.4 -13.3
Long term liabilities
Incr in long term debt 7.0 5.0 3.0 3.0 0.0 0.0 3.0 0.0 0.0 3.0
Decr in long term debt -5.7 -5.9 -6.0 -6.0 -5.4 -4.5 -4.5 -4.5 -4.0 -1.8
Incr (decr) in capital 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash from (used by) liabilities and capital 1.3 -0.9 -3.0 -3.0 -5.4 -4.5 -1.5 -4.5 -4.0 1.2
Net incr (decr) in cash 0.0 2.9 0.0 0.4 0.1 1.5 1.3 -1.2 2.0 0.7
Opening cash 3.0 3.0 5.9 5.9 6.3 6.4 7.9 9.2 8.0 10.0
Cash at year end 3.0 5.9 5.9 6.3 6.4 7.9 9.2 8.0 10.0 10.6
79

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BUSINESS PLAN 2017 – 2020

It is my pleasure to present TPL’s Business Plan for the 2017-2020 period.

Cultivating a hazard free safety culture to Reduce number of hazards,

Reduce non-value added,

Strategic Performance Targets for the Planning Period 2017 -2020

These strategic projects are highlighted in the following tables.

High Priority Projects Achieivng 50% RE Target

Allows 20% RE penetration, essential for Wind Generation

Tariff impact assumes donor funded investment and 5%

Smart & Prepay Metering

Upgrade of Nuku’alofa network to reduce line losses and

Outer Islands Renewable Project cosists of both establising RE plants (550KW in

IT Virtual Environment & Virtual server development to provide high availability,

The system will provide improved governance, the ability

Future Projects Committed by TPL

Generator Replacement Replacing or overhauling all CAT and Cummins generators

Outer Islands Network

Smart Metering Project - Installation of balance $14,000 smart meters in

 Customers (meters and loads)

TPL activities are outlined below:

Generation Distribution Customers

 Tongatapu – 11kV distribution network, 190 km of overhead line, 12km of

Across the four grids, low voltage reticulation is at 400/240 volts.

Generation & Consumption 2010 2011 2012 2013 2014 2015

30-Jun-15 2010 2011 2012 2013 2014 2015

4. POLICIES AND GUIDELINES GOVERNING THE DEVELOPMENT OF THE BUSINESS PLAN

4.1 Ownership Guidelines

4.2 Obligations under the NSDF

Tonga Power’s major obligations under the NSDF are:

4.3 Boards expectations

4.4 Energy Policy, Law and Legislation

Govt. Core Purpose

5.1 External Elements

 Aggressive TERM objectives

 Fuel price volatility

External Business Risks

TPL take all possible actions to increase safety

Product/Service and Supply Issues:

TPL Business Systems

QuickBooks Accounting Software Accounting and reporting

Quantate Risk Management Software Risk analysis and reporting

GIS Software Geographical interface system

Sincal Software Load flow analysis

Xsol Software Business process redesign and mapping

Internal Business Risks

Cultivating a hazard free safety culture to Reduce number of hazards,

Reduce non-value added,

6.1 Strategic Objective 1

Road to 50% RE Penetration

3 Case 2 + Vaini PV 1,000 2015 2,752 1,577 4,339 8%

4 Case 3 + 320KW SDG PV 320 2012 3,072 505 4,844 9%

8 Case 7 +2.2MW Wind 2,200 2017 7,622 6,360 15,895 29%

9 Case 8 + 2.2MW Wind 2,200 2017 9,822 6,360 22,254 35%

10 Case 9 + 3x1.3MW Solar PV 3,900 2019 13,722 6,150 28,404 41%

11 Case 10 + 2.2MW Wind 2,200 2019 15,922 6,360 34,764 52%

Key challenges faced by the objective are:

6.2 Strategic Objective 2

TPL’s distribution system traditionally comprised of radial circuits fed from a

The limitations of TPL’s current system are:

 Minimal communication and metering infrastructure is in place to aid in restoration

 Limited communication infrastructure exists to facilitate control and management

 There is no communication to customer facilities to allow customers and customer

 Some automation schemes are being implemented to reconfigure circuits to improve