First auction of financial transmission rights (FTRs)

The first auction of financial transmission rights (FTRs) is scheduled for Wednesday 12 June 2013. The introduction of FTRs is expected to promote greater competition in the retail electricity market for the long-term benefit of consumers.

Introducing FTRs was the Authority’s response to the Electricity Industry Act 2010 section 42(2)(c) requirement that the Authority amend the Code to provide a mechanism for wholesale electricity market participants to manage locational price risk on the national grid. The FTR Code amendments came into force in late 2011. Since then the Authority appointed an FTR manager, and IT systems have been put in place to support the FTR manager’s role and changes to the clearing manager’s role to provide clearing and settlement services for FTRs.

The FTR market will start with offerings of monthly inter-island FTRs. The FTRs will cover the price risk between Benmore in the South Island and Otahuhu in Auckland. July 2013 FTRs will be the first to be offered and more distant FTRs will be progressively introduced over coming months.

The introduction of FTRs also marks a change to the frequency of re-assessment of all electricity industry participants’ prudential security held by NZX as clearing manager. NZX is shifting from making weekly assessments of the prudential requirement from participants to making daily assessments of the prudential requirement. Further detail on this change is available from NZX.

The FTR auctions are to be run by the Authority-appointed FTR manager, Energy Market Services (EMS).

Further information on FTRs is available at:

• FTR manager website
• FTR clearing web portal
• Authority website

Transmission pricing methodology conference

The transmission pricing methodology (TPM) conference was held on 29-31 May 2013 at the West Plaza Hotel in Wellington.  

• Full transcript of the conference

The Authority will shortly publish a list of questions from the conference and invites parties who were not able to provide answers at the time, to respond in writing to the Authority to conference@ea.govt.nz by 5 pm Tuesday 25 June 2013.

Review of consumers’ propensity to switch and compare retailers: submissions published

Submissions on the consultation paper ‘Options for increasing consumers’ propensity to compare and switch retailers’ have been published.

• Submissions

Temporary changes to the configuration of the grid: consultation paper

The Authority is seeking feedback on a proposal to amend the Electricity Industry Participation Code 2010 to enable Transpower to make temporary changes to grid configuration in certain situations. The proposed Code amendment replaces a temporary Code amendment that expires in December 2013.

The proposed Code amendment would establish equivalent arrangements to the existing temporary provisions, with one key difference: Transpower would not be able to initiate a temporary change in grid configuration without notice unless requested to do so by the system operator or a participant. Transpower would continue to need to show a temporary change resulted in a net benefit before proceeding.

• Temporary changes to the configuration of the grid: consultation paper

Parties are requested to make a submission by 23 July 2013.

Current consultations

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

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