Enquiry into wholesale prices during February and March 2013

The Authority has released its enquiry into the increase in spot and hedge prices that occurred in late February and early March 2013.

Surplus hydro storage in the South Island in January 2013 was followed by an extended period of very low inflows in both islands. By the end of February 2013 national hydro storage had dropped significantly and was still declining. On 27 February 2013, wholesale electricity prices on the spot market increased rapidly across the country. Spot prices remained elevated until 14 March 2013, at which time they began to recede. The electricity futures price also showed a sharp increase from 1 March 2013.

The Authority concluded that overall the prices and response were as would be expected from the market. Increased prices reflected increased value of water given the conditions and uncertainties at that time. This resulted in increased thermal production, hedge contracting between parties and reduced demand . These actions reduced hydro usage and reduced spot prices as projected hydro lake levels improved.

A number of specific issues were observed that affected the operation of the market. The majority of these issues are currently being considered as part of projects already underway within the Authority. Where this is not the case, the Authority has recommended potential ways forward. These will be progressed further within the relevant Authority workstreams.

• The full enquiry document 

Part 10 implementation: agreement for registry switching moratorium

The transition phase of the Part 10 implementation project is scheduled for the two week period from 5.00pm on Friday 16 August 2013 to midnight on Wednesday 28 August 2013.

Feedback from traders on draft transition plans was that they favoured a voluntary switching and disconnection moratorium during the transition period.  The Authority has prepared a voluntary agreement for a registry moratorium on trader switching and disconnection of vacant properties during the transition phase while traders are not updating the registry. The Authority requests active traders that buy or sell electricity to the clearing manager in respect of an ICP consider this agreement and, if it is supported, sign and return an electronic copy of the agreement to marketoperations@ea.govt.nz by 5pm Friday 2 August 2013.

• The agreement document

The Authority will publish the names of traders who sign the agreement to inform the industry how widely the agreement has been accepted.

Part 10 implementation: updated transition plans

Minutes from the transition teleconference held on 20 and 26 June 2013 to finalise Part 10 transition arrangements have been published.

• Minutes and papers

Industry plans for transitioning to the new Part 10 have been updated following the industry teleconference and feedback from participants.  

• Feedback on transition plans - July 2013

The transition arrangements are summarised in the transition calendar.

Part 10 implementation: registry user acceptance testing

Registry user acceptance testing (UAT) ended on Friday, 26 July 2013.  UAT participants are requested to provide their final Part 10 UAT report to Simon Morris (simon.morris@assurity.co.nz), the Authority’s Part 10 Test Manger, by close of business Tuesday 30 July 2013.

The Part 10 test registry will be available again on Monday 5 August 2013 for metering equipment providers (MEPs) to complete a final test load of their metering records, and for ongoing Part 10 testing by other participants.   

• Participant user acceptance testing 

Part 10 implementation: updated registry functional specification

The registry functional specification for the implementation of Part 10 has been updated to address minor operational matters that have been identified during industry UAT.

• Part 10 registry functional specification

Summary of submissions on proposed Guideline for Metering Equipment Provider Audits

The Authority has published the summary of submissions for the consultation ‘Proposed Guideline for Metering Equipment Provider Audits’.

• Summary of submissions

Current consultations

Within-island basis risk (WIBR)

The Authority is seeking feedback on a consultation paper ‘Within-island basis risk: proposed approach’ which proposes a multi-point FTR as the preferred approach to assist participants to manage their within-island basis risk. The proposal is based on feedback received from the Locational Price Risk Technical Group and is a key initiative for further enhancing competition in the retail electricity market.

• Within-island basis risk: proposed approach

Started 25/6/2013; Ending 06/8/2013 5pm.

Settlement and prudential security review

The Authority is seeking feedback on a proposal to amend the Code to improve the wholesale market settlement and prudential security system.  The proposed Code amendments are substantially based on the work of the Wholesale Advisory Group, and take into account feedback received from the Settlement and Prudential Security Technical Group.  The proposals in this paper are important for enhancing competition in the retail electricity market.

• Settlement and prudential security review: consultation paper

Started: 18/06/2013; Ending: 20/08/2013, 5pm.

Arrangements to manage a retailer default situation

The Authority is seeking feedback on a proposal to amend the Code to establish arrangements for managing a situation where an electricity retailer does not meet its financial obligations or becomes insolvent (a retailer default situation). The Authority is also proposing to introduce guidelines describing the detailed processes and actions that would be taken if there is a retailer default situation.

• Arrangements to manage a retailer default situation

Started: 18/06/2013, Ending: 20/08/2013, 5pm.

Improving transparency of consumers’ electricity charges

The Retail Advisory Group is undertaking a review of whether there should be more transparency around consumers’ electricity charges. The purpose of the review is to identify and recommend alternatives that promote competition by ensuring consumers have timely access to sufficient information so they can understand their bills, see what is driving price changes and make choices about their retailer.

• Improving transparency of consumers' electricity charges

Started: 9/07/2013, Ending: 20/08/2013, 5pm.

Amendments to the procurement plan

The Authority has published a consultation paper ‘Amendments to the procurement plan’. The majority of the changes proposed by the system operator relate to the multiple frequency keeping provisions in the existing procurement plan.

• Amendments to the procurement plan

Starting: 9/07/2013, Ending: 20/08/ 2013, 5pm.

Aligning forecast and final prices

The Wholesale Advisory Group seeks feedback from interested parties on a discussion paper entitled: ‘Aligning forecast and final prices’. At the request of the Electricity Authority, the Wholesale Advisory Group is reviewing the feasibility, benefits and costs of measures to improve the alignment between forecast and final prices as a way of promoting greater competition.

• Aligning forecast and final prices

Starting: 9/07/2013, Ending:  23/08/2013, 5pm.

Modified design of dispatchable demand

The Authority is seeking feedback on a proposal to amend the Electricity Participation Code 2010 to implement a modified design of the dispatchable demand regime.  The proposed dispatchable demand regime is expected to enhance competition in the spot market as it allows demand-side participants to compete against generators for dispatch and for setting final prices.  The regime should also enhance the efficiency of the electricity industry for the long-term benefit of consumers.

• Modified design of dispatchable demand

Starting: 23/07/13; Ending: 03/09/13, 5pm.