Spot market settlement on real-time pricing

What is real-time pricing?

Currently the price people see when they sell or buy electricity on the wholesale market are only indicative: they get the final price two days later.

When we shift to real-time pricing (RTP), spot price information will be updated every time it changes. At the end of each half-hour trading period a time-weighted average of these prices will be published as the final price for that trading period. This new price certainty will mean consumers can act confidently to avoid high prices. Pricing will be more dynamic: for example, if enough consumers respond to a high spot price by reducing their consumption, the spot prices would go down – resulting in a lower final price for the trading period.

The spot market under RTP will far better support rapidly evolving technologies like battery storage and smart appliances, making it easier to capture the full potential of these innovations.

Read our fact sheet (PDF) for more information about RTP.

What is the real-time pricing project?

In March 2015 we began a project to investigate enhancements to the spot market to improve retail competition and make spot prices more efficient.

We sought feedback from interested parties in April 2016 on options to improve spot pricing arrangements in the wholesale electricity market. Our assessment suggested dispatch-based pricing would deliver greater net benefit to consumers than the other options we considered.

In August 2017 we consulted on a proposal to develop a dispatch-based real-time pricing option. Responses to frequently asked questions regarding the proposal can be found here.

After consulting on the final design elements in March 2019, we decided to amend the Code to implement real-time pricing in the wholesale spot market.

We will implement real-time pricing in stages over the next several years, with a current expected go-live date of October 2022.

The Authority is leading the project and will oversee this work. The system changes will be delivered by Transpower (as system operator) and NZX (as the Wholesale Information and Trading Systems manager and the Clearing manager).