Consultations

The Authority is consulting on a new trading conduct rule. We are proposing to replace clauses 13.5A and 13.5B and the definition of “pivotal” in Part 1 of the Electricity Industry Participation Code 2010 with a new trading conduct rule.

The proposed rule is intended to provide more clarity in the interpretation and enforcement of the trading conduct provisions.

Under the proposed rule, generators and ancillary service agents would be required to ensure any offers they make in the wholesale electricity spot market are consistent with offers they would have made in a market where no party could exercise significant market power.

We anticipate this change will promote more efficient prices when competition is weak and improve confidence in the wholesale market for the long-term benefit of consumers. 

The Authority will support any changes to the rule with enhanced monitoring and enforcement. The Authority Board will make a decision on the proposal in mid-2021.

We encourage interested stakeholders to respond with their feedback by 5pm Tuesday 23 March. 

This consultation paper acknowledges and builds on the work completed by the Market Development Advisory Group. For further background on the trading conduct provisions please see the project overview page or links below.

• 15 December 2020 MDAG recommendations paper on the review of trading conduct provisions
• 22 October – 5 November 2020 Supplementary consultation – MDAG’s review of the High Standard of Trading Conduct provisions
• July – August 2020 Evaluation Panels
• 25 February – 27 May 2020 High Standard of Trading Conduct provisions: review by the Market Development Advisory Group discussion paper
• 25 September 2013 Pricing in Pivotal Supplier Situations Recommendations paper – Report by the Wholesale Advisory Group (WAG)

The High Standard of Trading Conduct (HSOTC) provisions regulate the behaviour of generators and ancillary service agents when they make offers for supply of generation and instantaneous reserves to the New Zealand wholesale electricity market in locations where, and periods when, competition is weak.

The MDAG consider the current provisions lack certainty and proposed a new set of rules in the discussion paper released for consultation in February 2020. After considering feedback from submissions and the findings from the evaluation panels process, the MDAG changed some aspects of its original proposal.

The MDAG is proposing that the Authority replace the current HSOTC provisions in the Code (clauses 13.5A and 13.5B and the definition of “pivotal”) with the operative clauses that were consulted on in the February 2020 discussion paper (with minor drafting changes) and with more concise purpose clauses.

This proposal is expected to improve the efficiency of wholesale electricity spot prices in circumstances where competition is weak. This will help to promote the three limbs of the Authority’s statutory objective—competition, reliability, and efficiency—for the long-term benefit of consumers.

The High Standard of Trading Conduct provisions regulate the behaviour of suppliers (generators and ancillary service agents) when they make offers for supply of generation and instantaneous reserves to the New Zealand wholesale electricity market.

The MDAG consider the current provisions lack certainty and are proposing a new set of rules. The suggested changes are intended to drive more efficient electricity prices for consumers.

Cross submission on High Standard of Trading Conduct discussion paper. 

Based on feedback received at the High Standard of Trading Conduct workshops, the MDAG has decided to invite cross submissions in response to the submissions on their discussion paper.

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.

The MDAG will acknowledge receipt of all cross submissions electronically. Please contact MDAG@ea.govt.nz if you do not receive electronic acknowledgement of your cross submission within two business days.

Your cross submission is likely to be made available to the general public on the Authority's website. Submitters should indicate any documents attached, in support of the cross submission, in a covering letter and clearly indicate any information that is provided to the MDAG on a confidential basis. However, all information provided to the MDAG is subject to the Official Information Act 1982.
 

Supporting documents