Consultations

The extended reserve manager (ERM) published a draft extended reserve selection methodology, together with an example procurement schedule, a draft data specification, and a consultation paper. The draft selection methodology sets out the proposed method for selecting and procuring extended reserve, and defines the obligations for data provision under the scheme on North Island distribution companies and directly connected consumers. The draft was prepared under clause 8.54G of the Electricity Industry Participation Code 2010 (Code). 

Following consultation, NZX published submissions, a summary of submissions, and its responses to submissions. NZX also published preliminary, updated versions of the data specification and selection methodology. The Authority board will consider the updated selection methodology in February 2017.

Documents relating to the consultation are available on NZX’s website.

Transpower, as system operator, published an extended reserve consultation paper which sets out the technical obligations on North Island distribution companies and directly connected consumers who participate in the current AUFLS scheme, or who are selected (by the selection methodology) to participate in the new extended reserve scheme. The technical requirements schedule (TRS) was prepared under clause 8.54G of the Code, and the consultation documentation includes the TRS schedule, a sample compliance report, and a companion guide for testing of assets.

Following consultation, the system operator published submissions, a summary of submissions, and an updated version of the TRS. The Authority board will consider the updated TRS in February 2017.

Documents relating to the consultation are available on Transpower’s website.

During the same consultation period, the extended reserve manager also ran a consultation on the draft extended reserve selection methodology.

Following these consultations, and after reviewing the submissions received, we have published a decision paper outlining the Electricity Authority Board’s decision to proceed with the new extended reserve regime because it will support the reliability limb of the Authority’s statutory objective. The Board also approved the selection methodology.

We have published a consultation paper proposing 12 operational amendments to the Electricity Industry Participation Code 2010 (Code). The amendments are to correct and clarify aspects of the extended reserve regime, and prevent unintended consequences in operating it.

The extended reserve regime is used during a large and rare system under-frequency event, where all the instantaneous reserve has already responded, and extended reserve blocks of load trip in order to manage the fall in frequency. The extended reserve regime is set out in Part 8 of the Code.

The Authority has released a consultation paper on the level of the liability limit for the extended reserve manager as a market operation service provider. In April this year, the Authority consulted on the design for the new extended reserve arrangements, including the role of the extended reserve manager as a market operation service provider with limited liability. This further consultation is on the level of that liability limit.  The consultation is required before the limit can be specified in the Electricity Industry (Enforcement) Regulations 2010.

The Authority is proposing significant changes to the way that participants are required to provide automatic under-frequency load shedding (AUFLS). The amendments would significantly improve the efficiency and reliability of the service because the load would be selected for the service. Under the proposed amendments, AUFLS would be a form of extended reserves. Although AUFLS is currently the only type of extended reserves product, the Authority has adopted the more generic term (i.e. extended reserves) so as avoid barriers to other products and services in the future.

The Authority has released an extended reserves consultation paper proposing amendments to the Code. The draft Code amendment takes into account feedback provided at a series of workshops the Authority and the system operator held in 2013, and submissions on the second consultation paper released earlier this year on seven different options for procuring extended reserves. The Authority believes the preferred option described in the March 2014 consultation paper remains the most appropriate. However, the submissions have assisted the Authority to refine the detailed design of the proposed approach and update assumptions in the cost-benefit analysis.

If the draft Code amendment progresses, the Authority is targeting finalising the Code amendment by the end of June 2014.  There will be a further opportunity for participants to provide input on two documents that support the preferred option: the technical requirements schedule and the selection methodology.

The response paper to the second consultation is attached as supporting information. 

We are seeking feedback on a proposal to introduce an approach whereby the system operator ‘procures’ automated under frequency load shedding, or AUFLS, (currently being the only type of ‘extended reserves’) from transmission-connected loads. The proposal seeks to address problems with the existing common obligation approach which results in some inefficient selection of loads for AUFLS.

The proposed approach would result in parties providing different amounts of AUFLS based on their loads’ relative suitability (taking into account interruption cost, potential use as interruptible load within-day shape and within–year 'shape’). A compensation and cost-allocation mechanism is also proposed. It is expected that these proposals would deliver long-term benefits for consumers through improved system reliability, reduced instantaneous reserves and energy costs, and reduced customer load-shedding costs.

We are considering options to improve the way in which extended reserves are procured.

The Electricity Industry Participation Code 2010 currently places obligations on participants to automatically disconnect blocks of load at specified frequency and time settings during large under-frequency events. This obligation to provide automatic under-frequency load shedding (AUFLS) rests with distributors and direct connects in the North Island and with Transpower in the South Island. Each block of AUFLS represents a fixed proportion of the participant's load.

Disconnecting a portion of load for one to three hours during a large rare system under-frequency disruption provides protection against a complete electricity system collapse, after which it could take more than a day to restart and fully restore the system. The system operator is currently reviewing the technical requirements for AUFLS and is expected to make recommendations later this year.

In parallel with the system operator's review, we are considering options to improve the way in which AUFLS are procured. We are mindful that the term AUFLS refers to a specific mechanism to provide reserves, just as interruptible load is a particular mechanism to provide instantaneous reserves. We have therefore decided to adopt the term extended reserves to allow for the possibility that mechanisms other than AUFLS could be available in the future to deal with events currently covered by AUFLS.

We consider that procurement of extended reserves could be more efficient, as the current approach imposes mandatory obligations on participants to provide AUFLS.

Our preliminary view is that:

1. if a practical tender-based procurement process could be implemented relatively cheaply that would be the preferred option, being the most market oriented option;
2. if not, given a preference for small scale trial and error options, the next best option would be to focus on low cost ways to facilitate trading around extended reserves obligations (for example, by developing standard agreements/ protocols and establishing a bulletin board).

We invite submissions on our preliminary view via the linked Consultation paper by 5pm on Wednesday, 14 November 2012.