Decision-making and economic framework for distribution pricing methodology review
The Authority has completed its analysis of submissions and
cross-submissions on the draft decision-making and economic framework
for distribution pricing methodology review published on 8 May 2012. The
Authority has decided to adopt a decision-making and economic framework
for distribution pricing (the economic framework), involving:
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a decision-making component that reflects the Authority’s
interpretation of its statutory objective. This interpretation puts a
focus for making decisions about distribution pricing on promoting
efficiency in the electricity industry for the long-term benefit of
consumers
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an economic component that establishes the Authority’s preferred
hierarchy of pricing approaches for distribution pricing. This component
supports the objective of promoting efficiency in the electricity
industry for the long-term benefit of consumers. In order of preference,
the hierarchy of pricing approaches consists of:
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market or market-like charges
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exacerbators-pay charges
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beneficiaries-pay charges
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alternative charging options.
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Distribution pricing: alignment review
The Authority will shortly begin a review of distributors’ pricing methodologies. It will provide information about:
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the information that is disclosed by each distributor about its pricing methodology
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the extent to which each distributor’s methodology aligns with the principles
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whether a distributor’s pricing approaches and methods are efficient
or inefficient, given a particular set of network circumstances.
The Authority will use the review to assess whether the voluntary
pricing principles are resulting in distributors using efficient and
pro-competitive pricing structures, or whether alternative arrangements
are needed to achieve efficient pricing methodologies. The Authority’s
decisions about distribution pricing and the principles and guidelines
will be informed by its statutory objective and the economic framework.
The Authority has decided to engage a third party to assist with the
review and will conduct a tender process to select that party. RFP
documentation will be available on www.gets.govt.nz.
The indicative process and timeline for the review is as follows:
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RFP documentation published |
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5 March |
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Tender closes |
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2 April |
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Contract awarded |
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late April |
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Review commences |
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late April |
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Draft report provided to distributors |
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late July |
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Distributors to comment on draft report |
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late August |
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Analysis and finalisation of report |
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September/October |
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Final report provided to the Authority Board |
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November/December |
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Release of the Authority briefing to the incoming Minister
The Authority has published the briefing provided to the incoming Minister of Energy and Resources, Hon Simon Bridges.
It provides an overview for the new Minister on the Authority, its role
and functions, key recent events and key upcoming events.
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Review of advisory group administrative arrangements
The Authority is undertaking a review of the charter about advisory
groups and the advisory group terms of reference, together comprising
the ‘advisory group administrative arrangements’. The Authority
considers the advisory group administrative arrangements are generally
working well and, as such, is not undertaking a comprehensive review.
However, it is proposing to make a small number of minor amendments, and
has incorporated feedback from the Retail Advisory Group and the
Wholesale Advisory Group in developing its proposal. Submissions are due
on 16 April 2013.
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Transmission pricing methodology: submissions
Consultation on the Authority’s proposal for development and approval of
a new transmission pricing methodology closed at 5pm on Friday, 1 March
2013. 54 submissions (including 2 late submissions) were received.
Parties are reminded that they may make cross submissions to the Authority by 5pm on 28 March 2013.
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Part 10 implementation: submissions published
Submissions on the consultation ‘Proposed Code amendments to the new metering rules and Part 11’ have been published
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New fact sheets: smart meters
Two fact sheets on smart meters are the latest in the Authority’s series
looking at aspects of New Zealand’s electricity sector. Other fact
sheets cover topics including the electricity supply chain, breakdown of
a typical bill, price comparisons between different consumer groups and
internationally, and projecting future costs.
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Current consultations
Electricity Information Exchange Protocols: decisions and further consultation
The Authority has released a consultation paper to notify participants
of the Authority’s decision to confirm a number of revisions to
terminology, definitions and field attributes used in the EIEPs.
Started: 5/2/2013. Ending: 22/3/2013, 5pm.
Under Frequency Management Initiatives and Change to the Procurement Plan
The Authority has released a consultation paper on the proposed
operational changes to the way the system operator manages
under-frequency events, and changes to the ancillary services
procurement plan, which implements some of the above changes. The paper
also seeks views on the longer-term initiatives relating to
instantaneous and sustained reserves. Started: 8/2/2013. Ending:
27/3/2013, 5pm.
Loss factor methodologies
The Authority has released a consultation paper relating to losses of
electricity in distribution networks. The paper contains proposals to
publish and monitor updated guidelines on the calculation and the use of
loss factors, and to amend the definition of ‘losses’, the use of
‘losses’ and the use of related definitions in the Electricity Industry
Participation Code 2010. Started: 19/2/2013. Ending: 16/4/2013, 5pm.
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NZ electricity hedge contracts - 1 March 2013
 Information plays an important part in building market confidence and strength.
To assist interested parties in tracking market development, the Authority publishes NZ electricity hedge contracts as a standard section of its weekly Market Brief.
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