High Court declines Trustpower application for judicial review
On Friday 2 December 2016 the High Court issued its decision declining Trustpower's application for judicial review of the Authority’s decision not to extend the consultation period for the reviews of distributed generation pricing principles (DGPPs) and Transmission Pricing Methodology (TPM). The Court found no fault with the Authority’s consultation process.
The Electricity Authority has delayed the release of its Transmission Pricing Methodology (TPM) supplementary consultation paper until Tuesday, 13 December 2016. This is a delay from the previously advised release date of Tuesday, 6 December. The Authority is extending the date for receiving submissions by two weeks, to 24 February 2017.
We apologise for any inconvenience caused by the late notice about this delay.
The TPM supplementary consultation paper is delayed because some aspects of the paper require further work to finalise and ensure they’re consistently reflected throughout the package of material. We have decided to release all of the TPM material next week rather than release most of the papers and risk confusing submitters with subsequent revisions. We believe this approach provides stakeholders with the best basis for assessing the proposed refinements and making their submissions.
The Authority team is available to answer any immediate questions and will be visiting stakeholders in the near future to discuss the refinements. Please contact Isobel King via email (isobel.king@ea.govt.nz) if you would like more information.
Authority decision on the review of DGPPs and ACOT
The Authority proposed in May this year to remove the distributed generation pricing principles (DGPPs) from the Electricity Industry Participation Code 2010 (Code), and to shift responsibility for determining avoided cost of transmission (ACOT) payments from distributors to Transpower. The Authority has decided not to remove the DGPPs from the Code. Instead, we are amending the Code so that distributed generation that does not efficiently defer or avoid transmission costs will no longer receive ACOT payments under the regulated terms.
Transpower will assess which existing distributed generators in each region are required for Transpower to meet the grid reliability standards, and advise the Authority of its findings. The Authority will decide, based on Transpower’s advice, which existing distributed generation should receive ACOT payments under the regulated terms. Transpower can contract with new distributed generation where this would provide additional grid support, and it should only do so when it is the lowest cost option for meeting grid reliability standards. Distributors will no longer make ACOT payments to new distributed generation.
Over the long-term, this change will save consumers between $25m and $35m per year. The current rules mean consumers are paying for distributed generation that doesn’t reduce costs for them. Over the last eight years, the rate of ACOT payments has increased by 79%. Effectively, New Zealand consumers are subsidising the owners of distributed generation. Perversely, under the current ACOT rules the more transmission capability we have the higher the rate of the ACOT subsidy. Another perverse feature of the current rules is that they encourage distributed generation to be built in locations that increase future transmission costs (rather than reducing transmission costs).
The Code amendment is expected to create substantial long-term net benefits to consumers. It will largely end the subsidy aspect of the current ACOT arrangements, remove inefficient incentives on the investment in, and operation of, distributed generation, and will enhance competition.
Following feedback from consultation the Authority has decided not to proceed with its proposal to remove a regulated price ceiling for what distributors can charge distributed generators to connect to their networks. This issue may be revisited in the future after final decisions are made about how the costs of the transmission grid are allocated, and distributors have made more progress with setting cost-reflective charges.
We have also published a summary of the submissions we received in response to the consultation paper we released in May 2016.
Submissions on instantaneous reserve event charge and cost allocation
We have published the submissions we received in response to the Wholesale Advisory Group’s (WAG) discussion paper, Instantaneous Reserve Event Charge and Cost Allocation.
We asked the WAG to investigate the extent to which the current instantaneous reserve event charge and cost allocation arrangements support our statutory objective. The discussion paper explored the issues the WAG identified.
Stress test scenarios unchanged for the January–March quarter of 2017
The stress test scenarios that we previously published on our website will apply for the January–March 2017 quarter. There is no change from the previous quarter.
Certain participants in the wholesale electricity market must apply a set of standard stress tests to their market position. Participants must then report the results to their boards and to the NZX, as the independent registrar appointed by the Authority.
Questions about the stress tests can be directed to marketoperations@ea.govt.nz, with 'Stress test' in the subject line.
We have confirmed new dates for the two forums that were to be held on 7 and 8 December 2016, as follows:
Metering equipment provider (MEP) and authorised test house (ATH) forum: Wednesday, 8 February 2017
Trader and distributor forum: Thursday, 9 February 2017
Both forums will be held at Te Papa, Cable Street, Wellington.
We have separately contacted the people who originally registered for the December dates, to let them know about these new details. But if you would also like to register, or you are now able to attend, please contact marketoperations@ea.govt.nz for more information.
Requirements and processes for audits: New guidelines
We are consulting on guidelines and supporting information for auditors and audited participants, to reflect changes to the Code that will come into force on 1 June 2017.
