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3 November 2020

Welcome to Market Brief, the Electricity Authority’s weekly update on regulatory and market developments.

Consumer care guidelines
Decision to replace the system operator's Ancillary Services Procurement Plan
Mandatory market making Code amendment expires today
Reminder: MDAG's review of the High Standard of Trading Conduct provisions
Current consultations

Consumer care guidelines

Through a series of collaborative workshops and targeted engagement we have reviewed the vulnerable consumer and medically dependent consumer guidelines. We have worked closely with retailers, consumer representative groups, government and social agencies. This collaboration has led to the design of a single set of proposed consumer care guidelines which would replace the existing vulnerable consumer and medically dependent consumer guidelines. We are now seeking your feedback on the proposed consumer care guidelines.

We will be holding three workshops during the consultation period. At these workshops we will answer any questions about the consumer care guidelines and discuss the differences between the existing and proposed guidelines.

The workshop details are as follows:

Auckland, today (Tuesday 3 November) 1-3pm
Wellington, Thursday 5 November 10am-12pm
Christchurch, Wednesday 11 November 9.30-11.30am

Registration is essential, as numbers may be limited. Please see our website for more information, and please do not book any travel arrangements until you have received a confirmation of registration from the Authority.

Decision to replace the system operator's Ancillary Services Procurement Plan

We have decided to replace the system operator’s Ancillary Services Procurement Plan to incorporate changes proposed by the system operator. The system operator received two submissions on its consultation; we received no submissions on our consultation. The changes come into effect on 1 December 2020.

The decision paper is available below.

Mandatory market making Code amendment expires today

On 3 February 2020 the Authority made an urgent Code amendment to insert a dormant mandatory market making scheme into the Electricity Industry Participation Code 2010 (Code).

Urgent Code amendments expire after nine months. This amendment expires today (Tuesday 3 November 2020).

The dormant scheme was a backstop measure that would only be triggered into effect for one or more market makers if the performance standards set out in the Code amendment were not met.

Market making services are important to ensure participants have access to efficiently priced risk management contracts and to produce a reliable view of future prices (the forward price curve). The Authority made the amendment to ensure consumer interests were protected during planned outages of the inter-island High Voltage Direct Current (HVDC) transmission line and gas infrastructure during early 2020. There was a risk the outages could disrupt the futures market and lead to a withdrawal of market making services.

The Authority’s intervention was successful. The futures market responded favourably to the outages, as well as other disruptions caused by COVID-19 and announcements about the future of New Zealand Aluminium Smelters.

The Authority is currently considering amending the Code to insert a permanent mandatory market making backstop as part of its enduring approach to market making. The Authority will soon release a consultation paper for stakeholder feedback.

Market making performance is monitored closely by the Authority. If performance materially deteriorates while there is no mandatory market making backstop, the Authority will act decisively, and an urgent Code amendment can be implemented again quickly.

The Authority is currently managing the transition to its enduring market making approach, which includes an incentivised market making scheme with commercial providers. Participants can remain confident in wholesale market competition and their ability to manage risk as we deliberately transition over several years to ensure market making services continue and the integrity of the forward price curve is protected.

Reminder: MDAG's review of the High Standard of Trading Conduct provisions

The Market Development Advisory Group (MDAG) is seeking your feedback on their proposed changes to the high standard of trading conduct provisions in the Code. After considering feedback from submissions and the findings from the evaluation panels process, the MDAG has changed some aspects of its original proposal that was consulted on in February 2020.

Feedback from this short consultation will inform the MDAG’s recommendations to the Authority. We encourage you to respond before the deadline, 5pm on Thursday 5 November 2020.

Revised guidelines on wholesale market information disclosure obligations

Ending today at 5pm

MDAG's review of the High Standard of Trading Conduct provisions

Ending: 5/11/2020 5pm

Guidelines for raising consumer awareness of Utilities Dispues and Powerswitch services

Ending: 10/11/2020 5pm