Meri Kirihimete from the Electricity Authority
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Thank you to everyone who worked with us in 2022. It has been another rewarding and challenging year and we appreciate your input into our work programme.
Our office will close on Friday, 23 December 2022 and re-open on Wednesday, 4 January 2023.
The first market brief edition for 2023 will be published on 17 January 2023. We will publish any other news separately on our website before this time.
We wish you a happy and healthy festive season and look forward to working with you again in 2023.
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Decision on avoided cost of transmission payments to distributed generators
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In September this year, the Authority consulted on proposed changes to the Electricity Industry Participation Code 2010 (the Code) to remove the requirement for distributors to make payments to certain pre-2017 distributed generators for avoided cost of transmission (ACOT).
Having considered submissions, cross-submissions, and feedback on grid reliability, the Authority has decided to amend the Code to remove the requirement for distributors to make these payments. This is on the basis that:
- The current ACOT payment regime is costly, poorly targeted, and inefficient.
- Nodal pricing provides a more accurate signal of where and when generation is of value for grid reliability.
- The introduction of real-time pricing, and the dispatch notification product, will allow more parties (including distributed generators) to participate in nodal price discovery and dispatch.
The Authority has decided not to provide a phase out period for ACOT payments, noting in particular:
- Grid reliability: where nodal prices are not effective in incentivising targeted grid support, Transpower as system operator has tools to manage near-term risks, and Transpower as grid owner has obligations to plan for investment solutions.
- Security of supply: ACOT payments are not an efficient or effective tool for managing security of supply. Ahead of winter 2023 the Authority and the System Operator continue to focus on targeted interventions for system security purposes.
You can read the decision paper and Code amendment, as well as the submissions and previous consultation documents, on our website.
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Notice of decision to lay a formal complaint with the Rulings Panel
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On 13 December 2022 the Authority decided, under regulation 23(3)(b) of the Electricity Industry (Enforcement) Regulations 2010, to lay a formal complaint with the Rulings Panel against Ecotricity Limited Partnership.
The complaint relates to alleged breaches of the Electricity Industry Participation Code 2010 in relation to Ecotricity’s refusal to provide consumers’ electricity consumption data lawfully requested by The Utility Company Limited between 4 August 2020 and 7 June 2021.
The Authority has decided to lay a formal complaint with the Rulings Panel in relation Ecotricity’s failure to discharge its obligations under clauses 11.32A, 11.32B, 11.32E, 11.32EA and 11.32EB of the Code.
Find out more about the Authority’s process for dealing with alleged breaches of the Code below.
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Issues Paper published: Updating the Regulatory Settings for Distribution Networks
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The Authority is seeking views and feedback on how regulatory settings can support distribution networks with the uptake of non-network solutions and flexibility services. Non-network solutions (NNS) such as demand management and distributed energy resources (DER) can both unlock new possibilities in reducing peak demand and help to save on future grid and network investment.
Consensus is emerging across the electricity industry that a high level of uptake of NNS and flexibility services is critical to ensure that sector transformation occurs in the lowest-cost manner whilst enabling the best outcomes for consumers.
The issues paper follows a discussion paper published for consultation in July 2021, and a follow-up information request sent to distributors and flexibility traders in March 2022.
The paper identifies concerns and proposes “least regrets” options for consultation that should benefit efficiency and competition regardless of how the emerging market for NNS or flexibility services develops.
There are some short-term measures that the Authority considers would promote equal access to granular data on network congestion and visibility of DER (such as solar installations, inverters, and electric vehicles).
The Authority also suggests options to encourage the provision and competitive procurement of NNS, measures relating to DER standards, and suggestions to enhance collaboration to increase sector capability.
In light of the holiday break, submissions will close on 28 February 2023.
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Review of the forecasting provisions for intermittent generators in the spot market
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The Authority has initiated a project to review the forecasting provisions for intermittent generators in the spot market, as indicated in the Authority’s forward work programme.
The Authority is concerned that uncertainty in forecasts ahead of real time affects other participants’ trust and confidence to make consumption and generation decisions in response to forecast schedules. Adverse consequences for consumers include risks to security of supply and inefficiency (unit commitment regret and higher risk premiums in forward prices).
This work also aligns with suggestions in MDAG’s options paper, and recommendations in the Phase 2 review of the 9 August 2021 grid emergency, and ensures regulatory settings are fit for purpose as we transition to a 100% renewable electricity system.
The Authority intends to publish an Issues and Options Paper in the first half of 2023 to consult on the problem definition and possible policy solutions.
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Additional statutory objective for the Authority
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On 31 December 2022 an additional statutory objective for the Authority comes into effect following the passing of the Electricity Industry Amendment Act 2022.
The changes to the legislation include an additional statutory objective for the Authority to protect the interests of domestic consumers and small business consumers in relation to their electricity supply.
The additional objective applies only to the Authority’s activities in relation to the dealings of industry participants with domestic consumers and small business consumers.
The main statutory objective of the Authority is to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers.
The Authority has added an explanatory note to the Interpretation Document to note the additional statutory objective.
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Compliance Strategy and Compliance Monitoring Framework updated to reflect the Electricity Industry Amendment Act 2022
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A proactive monitoring and compliance function is critical to maintain and build trust and confidence in the electricity market.
Earlier this year the Authority developed a Compliance Strategy and associated Compliance Monitoring Framework to enhance its monitoring and compliance intent, to promote long-term benefits for consumers.
The Compliance Strategy and Compliance Monitoring Framework have now been updated to reflect the passing of the Amendment Act and the Authority’s additional objective.
In addition, the review frequency for the Compliance Monitoring Framework has been shortened from three to two years, to align with the review frequency for the Compliance Strategy.
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Reminder: 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.
Nominations close on 31 January 2023. Please see our website for information about nomination requirements and to access the nomination form.
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Submissions published: Driving efficient solutions to promote consumer interests through winter 2023
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The Authority published the consultation paper Driving efficient solutions to promote consumer interests through winter 2023 on 25 November. The paper was developed and released for feedback in response to an apparent increase in recent years in the frequency of trading periods where available supply is tight (or insufficient) compared to projected electricity demand and normal reserve requirements.
Consultation closed on 16 December 2022. Thank you to everyone who provided feedback – the submissions are now available below.
In the interests of time, the Authority is progressing technical assessments of the winter 2023 options where possible. This will ensure that all options that could be progressed in time for winter 2023 can be implemented if a decision is made to progress them.
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Submissions published: Promoting competition in the wholesale electricity market in the transition toward 100% renewable electricity
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The Authority has published submissions on the Issues Paper Promoting competition in the wholesale electricity market in the transition toward 100% renewable electricity.
Consultation closed on 14 December 2022 and the Authority received 31 submissions.
Thank you to everyone who made submissions. The Authority will now consider the submissions before making decisions on any next steps.
The original consultation paper and submissions are located below.
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Consultation on Updating the Regulatory Settings for Distribution Networks
Closing 5pm 28 February 2023
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Consultation on the Market Development Advisory Group’s Options Paper – Price Discovery in a Renewables-Based Electricity System Closing
Closing 5pm 6 March 2023
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Level 7, AON Centre, 1 Willis Street, PO Box 10041, Wellington 6143, New Zealand
Tel: + 64 4 460 8860 Email: communications@ea.govt.nz
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