Consultation on reorienting advisory group structures
We have published a consultation paper about reorienting our advisory group structures, following our decision to disestablish the Wholesale Advisory Group and the Retail Advisory Group.
We are seeking submissions on two proposals:
establishing two new advisory groups:
Innovation and Participation Advisory Group (IPAG), to focus on issues specifically related to new technologies and business models, and consumer participation
Market Development Advisory Group (MDAG), to focus on further evolving the ‘machinery’ of the electricity market.
changes to the Charter and terms of reference for the Advisory Groups, encompassing:
updating the Charter for Advisory Groups
replacing the terms of reference for the Security and Reliability Council
creating new terms of reference for the IPAG and the MDAG that capture their respective scopes of work.
Submissions should be received by 5pm on Tuesday, 20 September 2016.
Decision to develop details of a dispatch-based real time pricing option
We have decided to develop the details of a ’look-ahead’ dispatch-based price (option B from the information paper published in April 2016). We intend to develop this option in the 2016/17 financial year in sufficient detail to publish a proposal to amend the Electricity Industry Participation Code 2010 (Code).
After considering submissions on the information paper we remain of the view that settlement on real-time prices (RTPs) has the potential to make wholesale market spot prices (spot prices) more actionable and more resource efficient. Making spot prices more actionable and resource efficient would promote all three limbs of our statutory objective because it would result in:
greater competition between generators and consumers, especially when spot prices are high
a more efficient level of reliability in the power system as the system operator could come to rely equally well on demand bids or generation offers
a greater level of operational efficiency in the wholesale market as calculating spot prices would no longer need any manual intervention.
Decision to defer making change to allocation of instantaneous reserve availability costs
We have decided to defer our decision about amending the Code to alter the way instantaneous reserve availability costs are allocated. Issues raised by submitters on the March consultation paper led us to reconsider whether the proposal to allocate instantaneous reserve availability costs on a national basis was clearly more efficient than the existing island-based method of allocation.
Following our reconsideration, we are no longer confident the proposal is more efficient than the status quo. The implementation of a national market for instantaneous reserve will go ahead as planned because it does not appear imperative we amend the allocation before we do so.
Accordingly, we have deferred making a decision on the proposed Code amendment in the short term. Until we have identified a more efficient alternative, availability costs will continue to be allocated as they are now. We will consider more efficient options for allocating IR availability costs under the existing project to review the instantaneous reserve event charge and cost allocation, currently being undertaken by the Wholesale Advisory Group.
We have published Guidelines: Variable charges under the Low Fixed Charge Regulations (Regulations). The guidelines set out our interpretation of ’variable charges’ and our view on the Regulations’ requirements for variable charges that are based on a consumer’s electricity demand (demand charges) or capacity (capacity charges).
We intend the guidelines to provide clarity and assist distributors and retailers to comply with the Regulations if they adopt demand or capacity charges. This will assist distributors to introduce more efficient distribution charges, which would promote efficiency in the electricity industry for the long-term benefit of consumers. We have published the guidelines in response to requests for more clarity around the requirements of the Regulations from participants in submissions on our November 2015 consultation paper on the implications of evolving technologies for distribution pricing.
As advertised in Market Brief on 26 July, we are holding a distribution pricing conference in Wellington on Wednesday, 17 August 2016.
The topic of the conference is the Implications of evolving technologies for pricing of distribution services and follows our call for expressions of interest to attend the conference (published in Market Brief on 7 June).
If you wish to attend the conference, please email your name and organisation to conference@ea.govt.nz, with ‘Distribution Pricing Conference” in the subject line.
Registrations close this evening (Tuesday, 9 August 2016) at 5 pm. Please also let us know of any special dietary requirements you have. We will confirm your attendance and provide a conference pack via email, once registrations have closed.
