Arrangements to manage a retailer default situation

Following recent consultation, the Authority has decided to introduce new arrangements to manage a retailer default situation.  A retailer default situation is when a retailer does not meet financial obligations to participants or is insolvent. The potential for an unresolved default situation has been a long-standing concern for the electricity industry and policy-makers.

The amendments to the Code have been gazetted and will come into effect on 16 December 2013.

The Authority would like to thank all the market participants that provided feedback and support on the proposed arrangements, and will be in touch to discuss the implementation process in greater detail in the coming weeks.

• The decision paper and summary of submissions
• The gazette notice

More standardisation of use-of-system agreements

In finalising model use-of-system agreements (MUoSAs) in September 2012, the Authority committed to regular monitoring and review of use-of-system agreements (UoSAs) to determine if the MUoSA implementation objectives (improving efficiency and promoting retail competition) were being achieved.

In January 2013, the Authority invited feedback to enable it to keep abreast of any MUoSA issues uncovered by participants, including when participants are unable to agree a UoSA based on the relevant model agreement. Staff also actively sought the views of retailers and distributors on the uptake of the MUoSA, and had subsequent meetings with several participants.

Participants’ feedback suggested the Authority’s expectations are not being met consistently, with some distributors and retailers variously:

• not engaging in negotiations to update existing UoSAs
• extensively varying from the fundamental commercial provisions of the MUoSA, resulting in potentially adverse effects on efficiency or competition either through the nature of those terms or from the fact that standardisation was not occurring.

As a result of this feedback, the Authority became concerned that the MUoSAs are not delivering more standardised use-of-system agreements, nor achieving the expected benefits of improving efficiency and promoting retail competition. Consequently, the Authority has initiated a project to consider options for achieving its expectations for more standardisation of UoSAs, including potentially setting the MUoSA as a mandatory or default agreement.

• More information on the initial review of the uptake and implementation of the MUoSAs
• More information on the More standardisation of UoSAs project

Electricity information exchange protocols

The electricity information exchange protocols (EIEPs) provide a set of formats that distributors and traders use when electronically exchanging operational business information. Earlier this year the Authority consulted on a Code amendment proposal to require compliance with EIEPs 1, 2, and 3. 

The Authority Board approved the draft Code amendment on 14 October 2013, and delegated authority to the Chief Executive to finalise and publish the decision and responses paper, including a summary of submissions received from the consultation.

The Code amendment will be gazetted and will be available, along with a decision paper, on the Authority's website at the end of the week.

Revocation of Code provisions for Rio Tinto Agreements

The Authority has amended the Code to revoke Part 16 of the Code, and other related provisions, that became redundant following the expiry of the agreements for the supply of electricity to the aluminium smelter at Tiwai Point. The agreements that have replaced the expired agreements are not referred to in the Code. This amendment comes into force on 16 December 2013.

• Code changes

Changes to data publication procedures

The Authority has recently established a file transfer protocol (FTP) site that can be accessed by directing any web browser to ftp://ftp.emi.ea.govt.nz. This site will become an important component of the Authority’s data and reporting portal, which is currently being redeveloped. Market Brief will have further updates over the coming months relating to changes in data availability and publication procedures.

However, in the meantime the Authority is moving data that is currently available from the public folder of the SFTP server to the FTP site. Users of such data should begin obtaining the data from the FTP site rather than the SFTP server. Once the data has been available from both servers for a few weeks, it will cease to be available on the SFTP server.

• The October 2013 Centralised Dataset is now available from the FTP site – see .. \Archive\Centralised_Dataset_Oct2013\.
• The raw final pricing case files are available from the FTP site – see ..\Wholesale\Final_pricing\Raw_case_files\
• The final pricing GDX files for use in the vSPD model are available from the FTP site – see ...\Wholesale\Final_pricing\GDX\.

Please be aware the naming convention of the GDX files was recently modified to indicate the pricing status. Specifically, a ‘_P’ has been appended to the file name to indicate provisional, a ‘_I’ to indicate interim and a ‘_F’ to indicate final.

Please email phil.bishop@ea.govt.nz if you have any questions about the FTP site.

Retail Advisory Group minutes

The minutes for the Retail Advisory Group meeting held on 16 October 2013 have been published.

• RAG minutes

Current consultations

Transmission Pricing Methodology: sunk costs working paper

As part of its review of the Transmission Pricing Methodology (TPM), the Authority has prepared the sunk costs working paper to discuss how economic theory defines a sunk cost, and whether sunk costs are relevant to efficient pricing decisions, such as the pricing of electricity transmission services. The Authority has also published a shorter overview paper aimed at non-technical readers.

• Transmission Pricing Methodology: sunk costs working paper

Started: 08/10/2013; Ending: 19/11/2013 5pm

Changes to the system operator’s policy statement

The Authority is consulting on proposed changes to the system operator’s policy statement that covers key policies impacting industry participants, as required by the Electricity Industry Participation Code 2010.

• Changes to the policy statement

Started: 22/10/2013; Ending: 19/11/2013 5pm

Under Frequency Management initiatives – second consultation

The Authority is consulting for a second time on an under frequency management initiative that will require participants to provide fast instantaneous reserves information to resolve data issues.

• Under Frequency Management initiatives - second consultation

Started: 29/10/2013, Ending: 10/12/2013 5pm

Retail Advisory Group options paper on domestic contracting arrangements

The Retail Advisory Group is seeking feedback on options for addressing issues with the operational effectiveness of the domestic contracting arrangements.

• Retail Advisory Group options paper on domestic contracting agreements  

Starting: 05/11/2013, Ending: 17/12/2013 5:00pm