Market Brief - 9 April 2013

Market Brief
9 April 2013
Welcome to Market Brief, the Electricity Authority’s weekly update on regulatory and market developments.

Contents
• Undesirable trading situation claims withdrawn
• Reappointment of Chair of the Rulings Panel
• Transmission pricing methodology conference: clarification of views in submissions
• Effective date of any revised TPM
• Retail Advisory Group discussion paper on consumer switching
• Process for managing a retailer default situation: workshop
• Disclosure obligation guideline workshop summary
• Year in Review: stakeholder briefing
• Part 10: applications open for metering equipment provider auditors
• Auditor approval policy updated
• Draft determination of causer of under-frequency event on 2 March 2013
• Draft determination of causer of under-frequency event on 13 February 2013
• Approved test house forum
• Current consultations
• NZ electricity hedge contracts - 5 April 2013

Undesirable trading situation claims withdrawn

On 14 March the Authority received claims for the existence of an undesirable trading situation (UTS) from Norske Skog Tasman Limited and Mighty River Power Limited in respect of prices at the Kawerau nodes KAW0111, KAW0112 and KAW1101 from 8 March 2013. These claims were in regard to data and technical issues with the pricing process.

Clause 1.1(1) of the Electricity Industry Participation Code (Code) makes it clear that a UTS does not cover any contingency or event that, in the reasonable opinion of the Authority, can satisfactorily be resolved by any other mechanism available under the Code. The issues of the UTS claim were subject to the interim pricing mechanism described in clauses 13.167 to 13.182 of the Code, and have now been satisfactorily resolved through that mechanism. Both parties have now withdrawn their UTS claims, and the Authority will be taking no further action in relation to them.

Reappointment of Chair of the Rulings Panel

The Governor-General has reappointed Peter Dengate Thrush as Chair of the Rulings Panel for a further three years from 5 April 2013.

Peter Dengate Thrush is a barrister sole specialising in intellectual and industrial property, information technology, the internet and competition issues. He is a member of the Copyright Tribunal and until June 2011 was Chairman of the Board of Internet Corporation for Assigned Names and Numbers (ICANN). He has been a member of the Rulings Panel since March 2008, the Deputy Chair between July 2008 and August 2011, and the Chair since August 2011.
• Further information on the Rulings Panel

Transmission pricing methodology conference: clarification of views in submissions

The Authority is holding a transmission pricing methodology (TPM) conference for all parties who submitted on the `TPM: issues and proposal paper’.

The purpose of the conference is for the Authority to clarify and explore issues and views raised in submissions and cross-submissions on the `TPM: issues and proposal paper’, to advance its understanding of the key points of difference between submitters, and to explore issues arising from our preliminary analysis of submissions.

The conference will be held on 29, 30 and 31 May 2013, at the West Plaza Hotel, 110 116 Wakefield Street, Wellington. Due to the size of the venue numbers are limited.

Those wishing to attend should register by sending their names and company details to conference@ea.govt.nz with `TPM conference’ in the subject line.
Registrations and any feedback on the indicative agenda should be received by 5pm on Thursday, 9 May 2013.
• Conference procedure and indicative agenda

Effective date of any revised TPM

The Authority advises it does not expect any changes to the TPM to be effective by 1 April 2015.

Retail Advisory Group discussion paper on consumer switching

The Retail Advisory Group (RAG) is considering options for promoting retail competition by increasing consumers’ propensity to compare and switch retailers. The purpose of the project is to identify actions the Authority might take after 30 April 2014 to increase consumers’ propensity to compare and switch retailers.

The RAG is seeking feedback on issues including ways to measure consumers' propensity to switch and compare retailers; the nature of the problems requiring regulatory intervention to promote to consumers the benefits of comparing and switching retailers; and options for actions the Authority might take after April 2014.
• Discussion paper
Submissions should be received by 5pm on Tuesday, 4 June 2013.

Process for managing a retailer default situation: workshop

The Authority is developing a proposed amendment to the Code to establish a process for managing a retailer default situation. The proposal is based on the approach recommended by the Retail Advisory Group (RAG).
The Authority will consult on detailed Code amendments in due course, but it is first seeking feedback from interested parties on the practical aspects of the proposed process at a workshop to be held in Wellington on Tuesday, 23 April 2013, from 9.30am to 12.30pm.

The purpose of the workshop is to identify any aspects of the proposed process that might prevent a successful resolution of a retailer default before consulting on the detailed Code amendments. In particular, the Authority is seeking technical input on how the proposed process might affect the actions and activities of participants if there were a retailer default; and on the possible implications for existing switching processes.

To enable interested parties to provide input, the Authority has prepared working draft guidelines for managing retailer default situations to provide a focus for discussion. These draft guidelines have been prepared as if the proposed arrangements had been adopted, but does not reflect the current Code and should not be used or relied on if there is a retailer default event.

The workshop will focus on the views of interested parties on the practical implications of each aspect of the proposed process for participants and consumers. The workshop is not intended to address policy issues such as the definition of an event of default, or the mechanism for transferring any remaining customers of a retailer that is in default to other retailers. Policy issues will be considered during consultation on detailed Code amendments.

Those wishing to attend the workshop should register by sending their names and company details to conference@ea.govt.nz with `retailer default workshop’ in the subject line. Registrations close at 5pm on Wednesday, 17 April 2013.
• Draft guidelines for managing retailer default situations

Disclosure obligation guideline workshop summary

The Authority is currently consulting on a proposed guideline to assist market participants in applying the proposed wholesale market information disclosure obligations covering clause 13.2 of the Code.

An industry workshop was held on Friday, 15 February 2013 to assist with development of the guideline, and notes summarising the workshop have been published.
• Disclosure obligation guideline workshop summary
Please note the consultation on the proposed guideline will close at 5pm on Tuesday, 7 May 2013.

Year in Review: stakeholder briefing

The Authority will hold a briefing for stakeholders on its market performance Year in Review publication on Wednesday, 17 April 2013.

The briefing will be held at the Authority’s offices at Level 7, ASB Tower, 2 Hunter Street, Wellington and will take place just before a scheduled Regulatory Managers and Consumer Representatives meeting.

Those interested in attending should email conference@ea.govt.nz with ‘YIR stakeholder briefing’ in the subject line.

Part 10: applications open for metering equipment provider auditors

Applications are now open for parties who wish to become metering equipment provider (MEP) auditors. MEPs are responsible for the compliance of metering installations when the new Part 10 comes into effect on 6 June 2013.
• Auditor approval process and application form

Auditor approval policy updated

The Authority’s auditor approval policy has been updated to include the approval of MEP auditors. This policy replaces the RET01 auditor approval policy.
• Approved auditors

Draft determination of causer of under-frequency event on 2 March 2013

The system operator has made a draft determination on the causer of the under-frequency event on 2 March 2013. The draft determination has been published on WITS and submissions on it should be forwarded to the system operator at market.services@transpower.co.nz by 5pm on Wednesday, 17 April 2013.

Draft determination of causer of under-frequency event on 13 February 2013

The system operator has made a draft determination on the causer of the under-frequency event on 13 February 2013. The draft determination has been published on WITS and submissions on it should be forwarded to the system operator at market.services@transpower.co.nz by 5pm on Wednesday, 17 April 2013.

Approved test house forum

The Authority is holding a forum for approved test houses on Thursday, 11 April 2013. The forum will start at 9am and finish around 5pm and will be held at the Abel Tasman Hotel, 169 Willis St, Te Aro, Wellington. The forum will discuss the new Part 10, Electrical Safety Amendment Regulations 2012 and calculation of uncertainty.

Those wishing to attend should register by sending their names and company details to conference@ea.govt.nz with 'Approved test house forum attendee’ in the subject line. Registrations close 5pm Tuesday, 9 April 2013.
• Agenda

Current consultations

Loss factor methodologies

The Authority has released a consultation paper on losses of electricity in distribution networks. It contains proposals to publish and monitor updated guidelines on the calculation and the use of loss factors, and to amend the definition of ‘losses’, the use of ‘losses’ and the use of related definitions in the Electricity Industry Participation Code 2010 (Code). Started: 19/2/2013. Ending: 16/4/2013, 5pm.
• Loss Factor Methodologies
Review of advisory group administrative arrangements

The Authority seeks feedback on a proposal to make a small number of minor amendments to the charter on advisory groups and the advisory group terms of reference. The proposed changes would apply to the Retail Advisory Group, the Wholesale Advisory Group and any future advisory groups that may be established. Started: 5/3/2013. Ending: 16/4/2013, 5pm.
• Review of advisory group administrative arrangements
Part 10 implementation: transitional Code amendments and minor operational matters

The Authority is consulting on proposing amendments to Part 11 and the new Part 10 of the Code to facilitate participants’ transition to new metering arrangements that are scheduled to come into effect on 6 June 2013. The proposed amendments are to ensure the transition will not cause participants to breach the Code. The consultation paper also includes proposed amendments on compliance with the current Part 10 and the new metering arrangements. Started: 20/3/2013. Ending: 10/4/2013, 5pm.
• Proposed transitional and minor Code amendments to Parts 10, 11 and 15
Dispatchable demand “go-live” date extension

The Electricity Industry Participation (Dispatchable Demand) Code Amendment 2011 was gazetted on 20 October 2011 with a start date of 27 June 2013. In November 2012 the Authority decided to review the design of dispatchable demand with the view of implementing a cheaper and simpler design. That review is nearing a conclusion and a decision is expected to be made in May 2013. Meanwhile the start date of 27 June 2013 will not be able to be met and will need to be extended. Started: 8/3/2013. Ending: 17/4/2013, 5pm.
• Dispatchable demand “go-live” date extension

Strategic directions for market development

The Authority is seeking feedback on proposed strategic directions for market development. The strategic directions are intended to further explain the Authority’s future focus for market development, and to provide more information about how the Authority might respond to changing circumstances, such as technology change. Started: 12/3/2013. Ending: 23/4/2013, 5pm.
• Strategic directions for market development

Review of undesirable trading situation provisions

The Authority has reviewed the undesirable trading situation (UTS) provisions in the Code in light of experience with the UTS which occurred on 26 March 2011. The review did not identify a need for any fundamental changes, but has highlighted a number of areas where the Code could be improved. Started: 19/3/2013. Ending 1/5/2013, 5pm.
• Review of undesirable trading situation provisions

Part 10 implementation: Proposed Guideline for Metering Equipment Provider Audits

Part 10 of the Code establishes the regulatory framework for metering in the New Zealand electricity industry. The Authority has approved a new Part 10 and associated amendments to Parts 1, 11 and 15 to develop a new set of metering arrangements that will be effective from 6 June 2013.This consultation seeks feedback on the Authority's draft ‘Guideline for Metering Equipment Provider Audits’. Starting: 25/3/2013. Ending: 7/5/2013, 5pm.
• Guideline for Metering Equipment Provider Audits

Wholesale Market Information Disclosure Obligations (clause 13.2) Guideline

The Authority is seeking feedback on a proposed guideline to assist participants in applying proposed changes to clause 13.2 of the Code. The proposed changes to clause 13.2 were the subject of a consultation which closed on 21 December 2012. Starting: 26/3/2013. Ending: 7/5/2013, 5pm.
• Proposed clause 13.2A Guidelines

NZ electricity hedge contracts - 5 April 2013

Information plays an important part in building market confidence and strength.

To assist interested parties in tracking market development, the Authority publishes NZ electricity hedge contracts as a standard section of its weekly Market Brief.

ENDS

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