• Normal frequency asset owner performance obligations

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The Authority has initiated a process to achieve robust market making for all ASX NZ electricity derivative products. Market making is currently occurring for the quarterly and monthly baseload products.

The Authority will engage with the six largest generator-retailers to understand what barriers are inhibiting voluntary market making in the quarterly peak and options products and map out a path for voluntary market making in those products.

The Authority will also prepare to consult on possible amendments to the Code that would mandate market making of ASX products by the large generator-retailers. The Authority is starting work on the mandatory approach now to minimise lost time if voluntary measures prove unsuccessful and also because the work in developing the consultation paper, particularly the cost-benefit analysis, should prove helpful in discussions about voluntary market making.

In parallel, the Wholesale Advisory Group continues its in-depth investigation into options for further developing the ASX and over-the-counter hedge markets.

• Initial correspondence with generator-retailers

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The chart below shows the indicative timeline for completing the remaining working papers and finalising a second issues paper.

This timeline assumes no additional working papers will be required.


Long Run Marginal Cost (LRMC)
Problem definition (prob def)

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The Authority has approved an alternative form of letter of credit as an acceptable form of prudential security under clause 14.5(b) of the Code. 

A key difference with this alternative letter of credit is that it enables the relevant bank’s obligations to be limited to the outstanding amount of any particular participant identifier of a payer, rather than all outstanding amounts of the payer. 

Questions about how to use the new form should be directed to the clearing manager at cmanager@nzx.com.

• Alternative letter of credit 

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Every participant who was a party to a Risk Management Contract during the year 1 April 2013 to 31 March 2014 must submit a declaration certificate to the Authority by 30 June 2014. The requirements for these certificates are contained in clause 13.230 of the Code.

Please submit the declaration certificate on company letterhead using the Hedge Disclosure Declaration form to marketoperations@ea.govt.nz.

• Hedge Disclosure Declaration Form 

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Transmission Pricing Methodology (TPM): Connection charges working paper

The Authority is consulting on the TPM connection charges working paper.

• Transmission Pricing Methodology connection charges

Started: 06/05/2014; Ending: 24/06/2014 5pm

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The NZ electricity hedge contract report will not be updated until 1 July 2014. Please contact info@ea.govt.nz if you have any queries.

Existing NZ electricity hedge contracts are still available online.

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