Stepped up stress testing and market monitoring arrangements for Q1 2020
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There are planned outages of the HVDC link, Ahuroa gas storage and Pohokura gas field in Q1 2020. Given these factors, we want to make sure wholesale market participants are aware of the potential for spot price volatility and are pro-actively managing their exposure to spot price risks.
For the coming stress test cycle, a new ‘inter-island price separation’ stress test has been added. Unlike the two existing tests, the additional scenario assumes the HVDC is not available causing significant price separation for 8 hours. Further details are on our website.
Participants are reminded the test scenarios are not forecasts. Instead, they are simply scenarios designed to ensure disclosing participants have considered the spot price volatility which may arise from rare but possible risk events.
The purpose of the arrangements is to better protect consumers from the consequences of financial stress among wholesale electricity market participants.
Action required
Disclosure statements must be completed and sent to NZX (the registrar) no earlier than 2 December 2019 and no later than 20 December 2019. For this test cycle, the Authority has arranged for NZX to provide each disclosing participant with a summary report which shows their risk results, relative to results for all other parties (shown in anonymised form).
The stress test complements the Authority’s current work on hedge market enhancements that collectively aim to ensure a well functioning market for the long term benefit of consumers.
For more information please contact marketoperations@ea.govt.nz or stregistrar@nzx.com.
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