We are continuing to gather and process information as part of our investigation of Electric Kiwi’s claim. We will provide more information about our expected process and timetable once the investigation has progressed further.
We have published our 2016/17 work programme. The work programme is a non-statutory planning document that gives indicative information about our major projects for the year ahead. It supports our 2016/17 Statement of Performance Expectations (SPE), which includes our top priority projects.
When developing this work programme we considered submissions from stakeholders on our consultation on the 2016/17 appropriations and work programme. We thank those who provided feedback.
Our SPE identifies the implications of evolving technology as likely to have a significant impact on the electricity sector over the medium term. We have re-oriented the structure and presentation of the work programme to take into account this strategic focus in the SPE.
In particular, we consider evolving technologies and innovative business models are increasingly blurring the traditional demarcation between retail market, wholesale market and transport activities. We are concerned that the current market Code and market facilitation measures, market administration and operational processes and its compliance arrangements—developed when the traditional ‘bulk supply’ approach was prevalent—may inhibit mass-market forms of generating, storing, transporting and purchasing electricity. We are keen to remove barriers to these developments, including removing barriers to residential consumers purchasing directly from the wholesale electricity market or from local generators.
With this in mind, the new market development programmes for 2016/17 are:
Programme A: evolving technologies and business models
Programme B: consumer choice and competition
Programme C: pricing and cost-allocation
Programme D: risk and risk management
Programme E: operational efficiencies.
Although some new projects are included in Programme A, we already had several projects underway that are now included in Programme A. Further detail about the new market development programmes is provided in the work programme.
The same strategic developments have also led us to review our advisory group structures—see the next item in this market brief.
We currently have two advisory groups: the Wholesale Advisory Group (WAG) and the Retail Advisory Group (RAG), whose purpose is to provide independent advice on the development of the Code and on market facilitation.
The electricity sector is undergoing rapid evolution, driven by new technologies and business models, and changing consumer expectations. As the existing advisory groups recently noted in their letter to the Board on the 2016/17 work plan, these forces are increasingly blurring the traditional demarcation between retail and wholesale activities.
With these influences in mind, we are reviewing the current advisory group structures. Our current thinking is to re-orientate the advisory groups around key industry challenges and issues, rather than along the traditional industry structure lines.
We envisage that this re-orientation would see the existing advisory groups being replaced by two new groups, structured as follows:
Innovation and Participation Advisory Group (IPAG)—this group would focus on issues specifically inhibiting the entry and participation of evolving technologies and new business models in the electricity industry. It would also focus on enhancing consumer participation and choice.
Market Development Advisory Group (MDAG)—this group would focus on further evolving the ‘machinery’ of the electricity markets that are not specific to the requirements of new technologies and business models. This would include issues such as improving price signals and enhancing risk management markets, including the ancillary service markets.
We want input from stakeholders into the future structure of advisory groups. For this reason, we will release a consultation paper in the next month or so, seeking views on the proposed changes, including proposed changes to the Terms of Reference of the advisory groups and the Charter about Advisory Groups. After considering feedback we will decide how to move forward. At that point, we will call for nominations for the future groups, likely to occur in the next three months or so.
This timeline means that changes to existing advisory groups will not occur until later this year. The RAG and the WAG will continue to operate until such time as the new advisory groups are established.
The structure of the Security and Reliability Committee (SRC) is not part of this review process, although we will review the SRC charter and terms of reference as part of the consultation process detailed above.
We have amended the Code to require retailers to provide information about their generally available retail tariff plans to any person that requests them. The Code amendment took effect on 1 February 2016.
However, the Code does not specify the format or method a retailer may use to provide this information. Our consultation paper presents a draft file format for use by retailers and seeks feedback from interested parties. The use of the file format is voluntary. The format is an addition to the current suite of industry EIEPs and has been titled EIEP 14.
Submissions close at 5 pm on Tuesday, 9 August 2016.
Wholesale market information: Review of disclosure exclusions discussion paper
The WAG seeks feedback from interested parties on the Wholesale market information: Review of disclosure exclusions discussion paper. We asked the WAG to investigate whether the current exclusions from making wholesale market information readily available to the public (under subclause 13.2A(2) of the Code) support the efficiency limb of the Authority’s statutory objective.
The discussion paper explores the issues the WAG has identified. The paper also proposes some options for amending clause 13.2A of the Code to enhance the disclosure of relevant information, and suggests some market facilitation measures.
Submissions should be received by 5 pm on Tuesday, 23 August 2016. The WAG will consider submissions from interested parties before providing advice and recommendations to the Authority.
Code amendment: Electricity Industry Participation Code
Amendment (Requirements and processes for audits) 2016
We have decided to amend Parts 10, 11 and 15 and create a new Part 16A of the Code. The amendments will create better alignment between the governance of the audit regime and international best practice, and introduce operational enhancements to improve the efficiency of the audit regime.
The Code amendment will promote the efficiency limb of our statutory objective by improving transparency and the decisions made as a result of participant audits.
We have also published a decision and reasons paper, a response to submissions, and revised cost-benefit analysis for this Code amendment.
The amendment will come into force on 1 July 2017.
