Consultation on efficiency of prices in pivotal supplier situations
The Authority is seeking feedback on its proposal to improve the efficiency of prices in pivotal supplier situations. Our objective is to improve confidence in the efficiency of prices when competitive pressures in the wholesale market are weak, thereby contributing to our statutory objective by improving wholesale and retail market competition. For an option to be effective it should improve both consumers’ confidence that prices during pivotal supplier situations are efficient, and investors’ confidence they can offer prices needed to achieve a return on their efficient last resort plant.
The Authority requested and received recommendations from the Wholesale Advisory Group (WAG) after considering pivotal supplier situation issues. In line with the WAG's recommendations, the Authority’s proposal requires a generator or ancillary service agent to make offers and reserve offers in a manner consistent with a high standard of trading conduct. The proposal also defines specific behavioural principles, which together form a ‘safe harbour’. If a party adheres to these safe harbour principles, it would be deemed to have met the required high standard of conduct.
Submissions on this consultation paper are due by 5pm on 22 April 2014.
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Consultation on proposed Code amendments for FTR reconfiguration auctions
The Authority is consulting on proposed amendments to Part 13 of the Electricity Industry Participation Code (Code). The proposed amendments are intended to facilitate the implementation and operation of reconfiguration auctions in the financial transmission rights (FTR) market.
The FTR manager has proposed to introduce reconfiguration auctions to the FTR market in 2014 as part of its 2014 allocation plan. FTR reconfiguration auctions are useful for improving the flexibility of FTRs, and therefore the efficiency of the FTR market in providing locational price risk management. Improving locational price risk management is expected to improve competition in, and the efficient operation of, the wholesale and retail electricity market.
The key difference between reconfiguration auctions and the existing secondary trading process for FTRs is that reconfiguration auctions will allow existing FTRs to be transformed into different types of FTR based on the demand by bidders in the auction.
This is a four week consultation. Submissions on this consultation paper are due by 5pm Tuesday 8 April 2014. |
Authority decision on FTR manager’s proposed variation to the FTR Allocation Plan deferred
In February 2014 the FTR manager submitted its proposed variation to the FTR Allocation Plan to the Authority for approval. The Authority has considered this proposed variation and has concluded that it is unable to complete the approval process until after the associated Code amendments required to enable reconfiguration auctions have been consulted on and the submissions properly considered.
As a result, the FTR Allocation Plan will be considered for approval at the same time as the proposed Code amendments. We expect this to occur in mid-April 2014. Assuming the industry requires six months for system development, the earliest the allocation plan could come into effect would be either October or November 2014. The FTR manager will work with the FTR Users Group to confirm the earliest possible implementation date. |
Forum for Retail Data project
The Authority intends holding a forum on the Retail Data project at Meetings on the Terrace, 152 The Terrace, Wellington on Thursday 27 March 2014 starting at 9.30 am.
The purpose of the forum is to discuss feedback on the Issues paper the Authority released on 28 January 2014.
People interested in attending the forum should email their name and contact details to info@ea.govt.nz with ‘Retail data forum’ in the subject line. |
Proposal to remove the frequency keeping in-band constrained on and off compensation
On 5 August 2013 the Electricity Authority published a consultation paper that proposed to remove the in-band frequency keeping constrained on and off compensation. Submissions closed on 17 September 2013. However, further work on this initiative was put on hold because this initiative and the dispatchable demand (DD) project involve amending the same Code provisions. As the implementation date on DD is approaching, the work on this initiative can commence again.
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Efficient procurement of extended reserves - second consultation
On 17 January 2014 the Electricity Authority published a consultation paper that proposed to amend the approach on how the system operator ‘procures’ automated under-frequency load shedding, or AUFLS, (being the only current type of ‘extended reserves’) from transmission-connected loads. Submissions closed at 5 pm on Tuesday 4 March 2014.
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Update on transmission pricing methodology process
The Authority has recently received a number of requests from parties seeking clarity about the transmission pricing methodology (TPM) process and in particular the process that will follow from the avoided cost of transmission (ACOT) payments for distributed generation working paper. As publicised in Market Brief (16 July 2013), the Authority intends to develop and publish a series of working papers on key issues of the TPM proposal. The working papers will form a key input into a second issues paper on the TPM proposal.
The Authority identified the following working papers:
- Approach to cost benefit analysis of the TPM proposal (Complete)
- Definition of sunk costs (Complete)
- Avoided cost of transmission payments for distributed generation (Complete)
- Use of loss and constraint excess to offset transmission charges (Complete)
- Beneficiaries-pay approach (Submissions due 5.00pm on Tuesday 25 March 2014)
- Approach to residual charge (tbc)
- Connection charge (tbc)
The Authority intends to release a second issues paper in the second half of the 2014 calendar year. We are currently considering submissions on the 'ACOT payments for distributed generation' working paper, and plan to compile a summary of submissions on that working paper and release it publicly. No decision has yet been made about whether or not to conduct a review of the current ACOT payment arrangements, as contained in Part 6 of the Code. |
Transmission pricing methodology: working paper submissions published
On 21 January 2014, the Authority published a working paper to understand the efficiency implications of any changes to the TPM in relation to the use of loss and constraint excess (LCE) to offset transmission charges. This LCE working paper is one of the working papers informing a second TPM issues paper, which is due to be released in the second half of 2014.
Submissions closed on 4 March 2014. We received 13 submissions and they are now available on our website.
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Timeline for exemption consideration
All applications for exemptions are considered by the Authority’s Compliance Committee. Any applications received from today's date to 17 April will be considered at the Compliance Committee's meeting on 22 May 2014. Applications received after 17 April will be considered at the following Compliance Committee meeting on 27 June. The lead-in time prior to each meeting date is to allow time for the application to be reviewed and a recommendation paper prepared for the Committee. If an exemption is urgent, the applicant should contact marketoperations@ea.govt.nz as soon as possible, to discuss the possibility of an alternative process.
The Authority’s new website will be live later this month, and will include updated information on applying for exemptions, including the meeting dates for the rest of the year. In the interim, an updated application form can be requested from the market operations team at the email address above. |
Exemption granted for Transpower New Zealand Limited
The Authority has granted Transpower New Zealand Limited an exemption from clause 13.62(1) of the Code.
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Stress test scenarios unchanged for the April-June quarter of 2014
The stress test scenarios previously published on the Authority's website will apply for the April-June 2014 quarter. There is no change from the previous quarter.
The stress-testing regime requires certain participants in the wholesale electricity market to apply a set of standard stress tests to their market position, and report the results to their Board and to the NZX as the independent registrar appointed by the Authority.
Questions about the stress tests can be directed to info@ea.govt.nz. Please include 'stress test' in the subject line.
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Current consultations
TPM: Beneficiaries-pay working paper
As part of its TPM review, the Authority has prepared the ‘Beneficiaries-pay options’ working paper to examine different options for applying a beneficiaries-pay charge. This working paper will inform the second issues paper, mentioned above, due to be released in the second half of 2014.
Started: 21/01/2014; Ending: 25/03/2014 5pm
Proposed dispatchable demand policy statement amendments
The Authority is seeking feedback on proposed policy statement amendments considered necessary to implement dispatchable demand.
Started: 25/02/2014; Ending: 25/03/2014 5pm |
NZ electricity hedge contract - 7 March 2014
 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 contacts as a standard section of its weekly Market Brief.
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