Refreshed distribution pricing practice note published
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Distribution pricing reform is an increasing area of focus for the Authority. We want to see faster progress with distribution pricing reform to realise consumer benefits and to facilitate an efficient transition to a low-emissions future.
To support distribution networks with faster pricing reform we have published an updated distribution pricing practice note to provide more guidance on what good distribution pricing looks like, clear examples of good practice for different types of networks in different situations (eg, facing no, some or expected future congestion), and to better explain our expectations on the timing of reform.
The Authority thanks the distribution networks for their feedback on the practice note. We encourage distribution networks to continue to work closely with the Authority on pricing reform in 2022.
This pricing work complements the Authority’s broader programme of distribution sector reform.
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Call for nominations for the Security and Reliability Council
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The Authority is calling for nominations for three members of the Security and Reliability Council (SRC). The SRC provides the Authority with independent advice on reliability of supply issues, and on the performance of the electricity system and the system operator. The SRC comprises senior members of the New Zealand electricity industry, including consumers.
The Authority is particularly interested in nominations from people who have experience in governance or management roles responsible for:
- electricity generation, particularly hydro, wind or thermal
- commercial and supply chain management with a large electricity user
- power system operations and performance.
The Authority intends to appoint the successful nominees in March 2022 for an expected term of three years.
Nominations close on 25 January 2022. Please see our website for information about nomination requirements and to access the nomination form.
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Market Performance Quarterly Reviews for Q2 and Q3 published
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The Authority has published its Quarterly Market Performance Reviews for April-June 2021 and July-September 2021.
For the June 2021 quarter the greatest issue facing the wholesale market was meeting winter demand in the face of low fuel supplies. Low hydro storage and low gas production was exacerbated by above average demand leading to record coal usage and high wholesale prices. Some industrial users were required to reduce output in order to free up load for residential households.
Over the June 2021 quarter national hydro storage rose by 480 GWh. Total renewable wind generation exceeded 606GWh, more than the total amount of wind generation for each June quarter in the last five years. Additionally, over 13MW of extra distributed solar generation was installed across over 1300 ICPs.
The September 2021 quarter was marked by decreasing grid demand, increasing renewable generation and decreasing wholesale spot prices going into summer.
The effects of Covid-19 lockdown were seen in lower levels of electricity demand during the weeks in lockdown compared to the weeks prior to lockdown. Weekly demand decreased from 865.5 GWh at the beginning of the quarter to 774.7 GWh by the end of the quarter.
Average daily wholesale electricity spot prices dropped by over $50/MWh over the quarter. High spot prices were caused by high thermal generation with prices decreasing as hydro storage and renewable generation increased. By the end of the quarter weekly thermal generation fell by over ~10 percent while weekly geothermal generation increased by ~3 per cent and weekly hydro generation increased by ~8 per cent.
Compared to a year ago total gas production was 70 TJ/day less, leading to record gas prices of over $50/GJ.
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TPM cross submissions due, consultation on proposed new settlement residual allocation methodology to begin
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Cross-submissions on the Authority’s proposed new TPM are due at 5pm this Thursday, 23 December. Cross-submissions should only address points made in the initial submissions.
In addition, the Authority has accepted a late initial submission on the proposed TPM from the Tauhara North No. 2 Trust. This submission is now available on our website.
We are also giving you advance notice that the Authority will begin consulting on a proposed new settlement residual allocation methodology (SRAM) on or around 18 January 2022.
The SRAM determines the allocation of what is often referred to as the residual loss and constraint excess (LCE) - the remainder of the wholesale market LCE and Financial Transmission Rights (FTR) auction revenue after FTR payments have been made. The current SRAM will be obsolete once the 2020 TPM guidelines are implemented.
The consultation on proposed new SRAM principles will run for six weeks giving interested parties an opportunity to provide comprehensive feedback.
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Annual Corporate Plan 2021/22 Four-monthly progress report 1 July – 31 October 2021
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We have published our Annual Corporate Plan progress report for the period covering 1 July – 31 October 2021. This is the first four-monthly report against the new 2021/22 Annual Corporate Plan and the first four-monthly report in the four-monthly reporting cycle for the 2021/22 financial year.
The Annual Corporate Plan 2021/22 is available on our website.
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WITS API Projects Update – December 2021
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The WITS API project is well underway. All market data APIs included in the scope have been developed and NZX is currently performing end to end testing. NZX is anticipating that this process will be complete in January 2022 and that participant testing will be available soon after.
Production deployment has been delayed to the first quarter of 2022. Further communications will be forthcoming once dates are finalised with NZX.
The public data that will be available via API as part of this project includes data that can be found on the WITS website https://www1.electricityinfo.co.nz under market prices, energy quantities and reserve quantities.
Further API development will be planned for future NZX work programmes. NZX would like to hear what future API’s participants would find most useful: wits@nzx.com.
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Workshops for the compliance monitoring review – presentation published
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The Authority recently ran two workshops related to the new risk-based compliance monitoring regime that is under development.
The workshops provided an opportunity for stakeholders to share their views on areas of the Code where non-compliance is most likely to occur, and what areas could cause the most harm to consumers. Thank you to everyone who attended and provided their views.
The presentation that accompanied the workshops is now available to view on the Authority's website.
Should you have any additional feedback or would like to get in touch about this work, please contact Compliance.ElectricityAuthority@ea.govt.nz
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Happy holidays and office hours
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Our office will close on Friday, 24 December 2021 and re-open on Wednesday, 5 January 2022.
Thanks to everyone who worked with us in 2021. It has been another challenging year and we appreciate the contribution you have made to New Zealand’s electricity consumers over the past 12 months.
We wish you a happy and healthy festive season and look forward to working with you again in 2022.
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Review of competition in the wholesale market from January 2019 until early 2021 and an issues paper on inefficient price discrimination
Ending: 22/12/2021 5pm
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Cross-submissions on Transmission Pricing Methodology (TPM) proposal
Ending: 23/12/2021 5pm
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2021 dry-year event review
Ending: 25/1/2022 5pm
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9 August 2021 - UTS preliminary decision
Ending: 3/2/2022 5pm
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Level 7, Harbour Tower, 2 Hunter Street, PO Box 10041, Wellington 6143, New Zealand
Tel: + 64 4 460 8860 Email: communications@ea.govt.nz
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