Scarcity pricing in effect from 1 June 2013

The “scarcity pricing” Code amendment comes into force on 1 June 2013.  Scarcity pricing is the Authority’s response to section 42(2)(b) of the Electricity Industry Act 2010, which required the Authority to amend the Electricity Industry Participation Code 2010 to impose a floor or floors on spot prices for electricity in the wholesale market during supply emergencies.

The Authority gazetted this Code amendment in October 2011. Since then, the system operator and the pricing manager have developed software and business procedures which are ready to meet the Code effective date of 1 June 2013.

Scarcity pricing provides the pricing manager with a means of modifying prices in the wholesale electricity market when the system operator forces load shedding because there isn’t enough generation to meet demand in either one or both islands.  In a scarcity pricing situation, prices will be set between a $10,000/MWh price floor and a $20,000/MWh price cap on the spot market. This very rare event will only be applied if the system operator has first issued a national or island wide shortage declaration, when an electricity supply emergency causes forced power cuts (emergency load shedding) throughout either one or both islands.

• Further information about scarcity pricing

Wholesale Advisory Group discussion paper on pricing in pivotal supplier situations

The Wholesale Advisory Group (WAG) seeks feedback from interested parties on a discussion paper entitled:  ‘Pricing in pivotal supplier situations’. The WAG provides independent advice to the Authority on the development of the Code and market facilitation measures, focusing on the wholesale market. WAG has an independent chairperson and comprises members from industry and consumer representatives.  

Submissions are due by 5pm on 9 July 2013 and may be emailed to wag@ea.govt.nz with 'Pricing in pivotal supplier situations' in the subject line. The WAG will consider submissions from interested parties before providing advice and recommendations to the Authority.

• Pricing in privotal supplier situations discussion paper

Draft determination of causer of under-frequency event on 16 April 2013

The system operator has made a draft determination on the causer of the under-frequency event on 16 April 2013. The draft determination has been published on WITS and submissions on it should be forwarded to the system operator at market.services@transpower.co.nz by 5pm on Thursday, 6 June 2013.

Part 10: updated participant transition plan

The Part 10 participant transition plan has been updated to align it with the new 29 August 2013 effective date. The Authority asks participants who will be transitioning systems to the new Part 10 arrangements, and are affected by the participant transition plan, to email primary and secondary contacts for the transition to marketoperations@ea.govt.nz by 31 May 2013. The Authority will establish a team to facilitate communication leading up to and through the Part 10 transition phase.  The first meeting of the transition team is 20 June 2013. The agenda, meeting papers and teleconference details will be provided in due course.

• Updated participant transition plan

Part 10 industry testing: updated UAT calendar and test scenarios

The calendar and test scenarios for industry user acceptance testing (UAT) of the Part 10 registry changes have been updated. Any questions regarding these documents or UAT can be directed to Simon Morris (simon.morris@assurity.co.nz), the Part 10 Test Manager.

• Updated UAT calendar and test scenarios

Proposed guideline for metering equipment provider audits: submissions published

Submissions on the consultation paper ‘Proposed guideline for metering equipment provider audits’ have been published.

• The Authority received 9 submissions

Review of undesirable trading situation provisions: submissions published

Submissions on the consultation ‘Review of undesirable trading situation provisions’ have been published.

• The Authority received 10 submissions

Distributed generation: statistics

Under Part 6 of the Code, distributors have an obligation to report to the Authority annually on information concerning the connection of distributed generation. The information reported for the 2012 calendar year shows a net increase of 464 connections contributing to a net increase of 6.4 MW in the nameplate capacity of distributed generation connected nationwide.

• Summary statistics

Reminder to Directors: Disclosure of information about quantity of electricity sold by connected retailers

The Authority reminds directors of distributors that, under section 88 of the Electricity Industry Act 2010 (Act), they must ensure that the distributor discloses the quantity of electricity sold each financial year by connected retailers to customers who are connected to its local network.

The disclosure must be made in a statement to the Authority within two months after the end of the financial year and must be publicised by both the Authority and the distributor.  Under section 73 of the Act, “financial year” means a period of 12 months ending on 31 March.   

• Statement form

Authority approval of settlement agreement

On 21 May 2013, the Compliance Committee approved the settlement agreement concerning the investigation into a breach of clause 14.37(1) of the Electricity Industry Participation Code 2010 by Southpark Utilities Limited.

The investigation concerned the failure by Southpark Utilities to pay the clearing manager the amount of its invoice in cleared funds by 1400 hours on 20 November 2012. The breach was entirely due to process failures.

• Settlement agreement

Changes at the Electricity Authority

The Authority has recently undertaken a review of where functions are located within its structure, and what roles will be needed to perform at an optimal level in the future. Several changes have been made to the Authority’s structure, some positions have been disestablished and new ones created, and some roles have been retitled.

The development of all significant Code and market facilitation measures is now in the Market Design group led by John Rampton, General Manager, Market Design. The Common Quality team has been transferred from the Operations Development group to Market Design, and is now part of the Wholesale Markets team reporting to Tim Street, Manager, Wholesale Markets.  This change has been made to achieve a more integrated treatment of common quality and wholesale market issues, facilitate better interaction with the advisory groups on common quality issues, and make it easier for our stakeholders to understand where Code development activities sit within the Authority.

The Operations Development group, minus Common Quality, is renamed the Market Services group led by Fraser Clark, General Manager, Market Services. The change in name reflects a sharper focus for this group on market services, service provider performance and implementation of new systems arising from the Market Design group’s work.  The only Code development responsibilities for the Market Services group are those related to systems and processes that enable participants to more efficiently meet their Code obligations.

The responsibilities of the Market Operations team within the Market Services group have been narrowed to focus on service delivery and service provider management, but broadened to encompass all service providers including the system operator.  System operations matters will now be dealt with by the Market Operations team.  The Authority is currently advertising for a new Manager of Market Operations (MMO).

When an appointment is made to the MMO role, Ron Beatty will become Principal Adviser, Market Services.  This is a new role established to ensure a high level of experience and subject matter expertise is available to the Market Services team. The Principal Adviser will also work with key stakeholders such as auditors, test houses and the operations teams of industry participants to ensure higher quality outcomes from their activities.

The structure of the Market Performance group, headed by Bruce Smith, now comprises two teams: a Market Analytics team and a Market Monitoring team. The creation of these teams aligns staff expertise with specific functions performed in Market Performance, and assembles under the manager of each team the resources required to deliver clearly defined objectives.  Managerial appointments to those two teams will be made shortly. There are also changes in the Corporate Services and Legal and Compliance groups. 

Current Consultations

Options for increasing consumers’ propensity to compare and switch retailers

The Retail Advisory Group is considering options for promoting retail competition by increasing consumers’ propensity to compare and switch retailers. The project’s purpose is to identify actions the Authority might take after 30 April 2014 to increase consumers’ propensity to compare and switch retailers. Started: 9/4/2013. Ending: 4/6/2013, 5pm.

• Options for increasing consumers’ propensity to compare and switch retailers

Review of domestic contracting arrangements: issues paper

The Retail Advisory Group is seeking feedback on issues relating to the operational effectiveness of the domestic contracting arrangements, so it can identify specific issues to be addressed. Started: 16/4/2013. Ending: 11/6/2013, 5pm.

• Review of domestic contracting arrangements: issues paper

Consultation on changes to allocation of constrained-on and -off amounts to system operator

The Authority is proposing to remove the provision in the Code requiring the system operator to pay for constrained-on and constrained-off amounts.  The Code would instead require the clearing manager to identify and publish constrained-on and -off amounts associated with the system operator exercising discretion to depart from the dispatch schedule.  Started: 14/5/2013. Ending: 25/6/2013

• Changes to allocation of constrained-on and -off amounts to system operator