Market Brief – Electricity Authority - 5 June 2013

Market Brief – Electricity Authority

5 June 2013

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

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Presentation to stakeholders

Dr Brent Layton, Chair of the Electricity Authority and Chief Executive Carl Hansen gave a presentation at a stakeholder breakfast in Auckland this morning.
Presentation to stakeholders
In addition to the presentation slides, Dr Layton has prepared a paper to entitled The economics of electricity to provide a more comprehensive and detailed analysis of recent criticisms of current market arrangements.
The economics of electricity

“Scarcity Pricing” Code amendment now in force

As reported in last week’s Market Brief, the “scarcity pricing” Code amendment came into force on 1 June 2013.  Scarcity pricing is the Authority’s response to section 42(2)(b) of the Electricity Industry Act 2010, which required the Authority to amend the Electricity Industry Participation Code 2010 to impose a floor or floors on spot prices for electricity in the wholesale market during supply emergencies.

The Authority gazetted this Code amendment in October 2011. Since then, the system operator and the pricing manager have developed software and business procedures to ensure readiness to meet the Code effective date of 1 June 2013.

Scarcity pricing provides the pricing manager with a means of modifying prices in the wholesale electricity market when the system operator forces load shedding because there isn’t enough generation to meet demand in either one or both islands.
Further information about Scarcity Pricing

Correction to item in Market Brief last week

In a scarcity pricing situation, the average price will be set between a $10,000/MWh price floor and a $20,000/MWh price cap on the spot market. This very rare event will only be applied if the system operator has first issued a national or island wide shortage declaration, when an electricity supply emergency causes forced power cuts (emergency load shedding) throughout either one or both islands.

Market Administrator approval of new profiles

During May 2013, the Market Administrator approved five new profiles for two participants. The proposed start date for these profiles is 1 June 2013.
Approved profiles v 2.8

Retail Advisory Group papers

Papers for the 15 May 2013 meeting of the Retail Advisory Group have been published.
Meeting papers

Current consultations

Review of domestic contracting arrangements: issues paper

The Retail Advisory Group is seeking feedback on issues relating to the operational effectiveness of the domestic contracting arrangements, so it can identify specific issues to be addressed. Started: 16/4/2013. Ending: 11/6/2013, 5pm.
Review of domestic contracting arrangements: issues paper
Consultation on changes to allocation of constrained-on and -off amounts to system operator

The Authority is proposing to remove the provision in the Code requiring the system operator to pay for constrained-on and constrained-off amounts.  The Code would instead require the clearing manager to identify and publish constrained-on and -off amounts associated with the system operator exercising discretion to depart from the dispatch schedule.  Started: 14/5/2013. Ending: 25/6/2013
Consultation on changes to allocation of constrained-on and -off amounts to system operator

NZ electricity hedge contracts - 31 May 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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