Market Brief - 31 May 2016

We’ve augmented the EMI website's switching reports to include a filter on switch types. This enhancement provides further insight into the switching activity that takes place in the retail electricity market.

The three switch types are ‘trader’, ‘move-in’ and ‘half-hour’. Trader switches follow the switch process that applies when the customer of an electricity retailer (customer) has an existing contract with the losing trader at the ICP. Move-in switches follow the switch process that applies when the customer is new to an ICP. Half-hour switches are switches of ICPs with larger metering categories. More information is available in the report notes.

The augmented retail reports are: switching trends, switching breakdown, switching summary, and relative switching.

Looking at the switching trends report we observe the following:

Trader switches peaked in 2011 when the What’s My Number campaign began and show a strong seasonal correlation to the winter months, which is also when this campaign runs.
Move-in switches have steadily increased and are the main contributor to total switching increasing over time. These results align with our surveys which show that moving house prompts a residential customer to consider their electricity supply choices. An increasingly competitive market structure underpins this increase, as do customers with both awareness and increased choice. Switches are a count of traders supplying ICPs changing, not customers changing traders. Some move-in switches will be loyal customers who decide to sign up with their previous supplier at their new ICP.

Examples of insights that can be drawn from the augmented reports are highlighted at the following links:

We have published a summary of submissions from the consultation on our 2016/17 appropriations and work programme. The timing of this release follows the Government’s release of Budget 2016 on Thursday 26 May. We manage our funding prudently and are committed to holding our operational costs constant for 2016/17.

The appropriations were finalised as part of the Budget and will be included in our 2016/17 Statement of Performance Expectations, which we will publish in June 2016.

We are finalising the 2016/17 work programme and expect to publish it in late June 2016.

The summary of submissions are available on our website.

2016/17 Appropriations and Work Programme

The Electronic Dispatch Facility (EDF) is the component of the market system that sends dispatch instructions to generators and reserve providers through the GENCO software application. It allows them to receive and acknowledge dispatch instructions, as required by the Electricity Industry Participation Code 2010.

Transpower is running a project to introduce alternate communication protocols and remove the need to use GENCO, for greater flexibility and reduced barriers to entry. We also expect the project will lower complexity and provide a more reliable and secure dispatch management service. This initiative will support the Authority’s statutory objective to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers.

Transpower seeks input from stakeholders on dispatch management to understand the benefits and costs, which will be used to justify the investment.

Please contact Transpower if you have an interest in this issue, especially if you are a directly connected generator, embedded generator, or interruptible load provider using a trading agent to provide dispatch. Please supply your contact details on the system operator’s registration page by Friday, 10 June 2016. You will then receive a survey.

Contact the Project Manager, Marije Postma by email (marije.postma@transpower.co.nz), or visit the system operator website for further information on the EDF Phase III project.

Scarcity pricing proposed Code amendments

We have published a consultation paper outlining six operational issues with the current scarcity pricing regime. The paper includes proposed Code amendments to resolve these issues.