Authority acts in response to increased financial pressure in the sector
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The Authority and many participants in the sector have been concerned about the prospect that the COVID-19 lockdown will lead to increased levels of non-payment of electricity bills, and additional doubtful debt, as households and small and medium-sized enterprises (SMEs) default.
At the same time, there is increased pressure on retailers to try to avoid disconnecting customers who haven’t paid their bills.
While all retailers successfully made their settlement payments on 20 April 2020, it is currently unclear to us if this will be the case on 20 May 2020. The Authority considers the uncertainty requires quick and decisive action to reduce the potential for multiple trader default.
The Authority will be making an urgent Code amendment this month to put in place a solution for electricity retailers facing liquidity problems who are otherwise sound but may exit the market due to the consequences of the COVID-19 pandemic. The solution provides breathing space for these retailers by having their distribution debt from the six largest distributors (including passed through transmission charges) deferred, by allowing an additional 60 days for payment of distribution charges for a period of up to nine months.
This effectively means qualifying retailers will benefit from a break of up to nine-months from a maximum of 60 days of distribution and transmission charges. Retailers that have sufficient financial backing to deal with the increased bad debt resulting from the COVID-19 pandemic will not qualify for the scheme.
The Authority has selected the six largest distributors on the basis they have the financial strength to cope with deferred payments from qualifying retailers. The Authority has written to these distributors to notify them of our decision
Details of the scheme are on our website.
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Submissions on MDAG’s High Standard of Trading Conduct discussion paper
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The consultation period for the Market Development Advisory Group’s High Standard of Trading Conduct discussion paper closed yesterday and submissions will be published online as soon as possible this week.
The cross-submission period is now open. Please email your cross submission to MDAG@ea.govt.nz with “High standard of trading conduct provisions – Discussion paper – cross submission” in the subject line. The closing date for submissions is 5pm, Wednesday 27 May 2020.
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TPM CBA webinar and presentation published
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On Tuesday 28 April the Authority hosted a webinar presenting revisions to the cost benefit analysis that supported the Transmission Pricing Methodology: 2019 Issues Paper.
The webinar and presentation is available on the Authority’s website here.
Thanks to everyone who joined the webinar. We will soon publish answers to a small number of CBA related questions raised during the webinar that we didn’t get time to answer.
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Top Energy has applied for a section 90 exemption from Part 3 of the Act
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Top Energy has applied for an exemption from corporate separation and arms length requirements in relation to diesel/bio diesel generation that it wishes to connect to its network to support reliability.
The Authority is currently considering the application. Before reaching a final decision, the Authority will release a draft decision for public feedback.
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Hedge declaration certificates due 30 June 2020
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Participants who submitted hedge information in the previous year (1 April 2019 – 31 March 2020) must submit a declaration certificate to the Authority by 30 June 2020. The requirements for these certificates are contained in clause 13.230 of the Code.
Please submit the declaration certificate on company letterhead using the Hedge Disclosure Declaration form to marketoperations@ea.govt.nz.
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Reminder: Participant registration and information update
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The Authority reminds participants that it is their responsibility to register with the Authority as a participant, and to ensure the information they provide for registration is up to date. Please check that all information is up-to-date including contact names and details that may have changed. All changes and updates to the participants register may be directed in the first instance to compliance@ea.govt.nz.
Failure to register or to update information is an offence under section 31 of the Electricity Industry Act 2010.
The participant register is available on our website.
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Annual assessment of security of supply published
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The system operator published its final Security of Supply Annual Assessment for 2020 on 30 April 2020. Submissions on the draft report have also been published. The Assessment provides a ten-year view (2020 to 2029) of security of supply for the New Zealand electricity system covering both energy and capacity risks.
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Reminder: Energy Trader Forum – this Thursday
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Join the first online Energy Trader Forum this Thursday, 7 May free of charge. With the government's COVID-19 controls having a significant impact on both demand and generation, it’s a good time to get together and share a pathway forward.
Greg Sise - Managing Director, Energy Link and Mark Todoroff - Business Development Director, TESLA Asia Pacific will share insights into immediate, medium and long-term effects on demand. A user panel will also share the challenges ahead of them for recovery and debt management for starters. The forum will also look at topical market updates and feature a few other surprise presentations.
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We have the latest updates in relation to the Authority’s response to COVID-19. We have also published advice for consumers and we have started a campaign to encourage consumers to talk to their retailer and check they are on the right plan.
Please visit our website for more information.
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Cross submissions on MDAG’s High Standard of Trading Conduct discussion paper
Ending: 27/05/2020 5pm
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Hedge Market Enhancements Market Making consultation paper
Ending: 16/06/2020 5pm
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