Market Brief – Electricity Authority - 15 June 2013

Market Brief
16 July 2013
Welcome to Market Brief, the Electricity Authority’s update on regulatory and market developments.

Exemptions granted by the Authority

Four new exemptions have been granted by the Authority and gazetted.  They are listed below and the full Gazette notices and reasons for approval for each have been published on the Authority’s website.
• The Authority has granted Arc Innovations Limited an exemption (No. 168) from compliance with item 16 of Table 1 of Schedule 11.4 of the Code.  The exemption will come into force on 29 August 2013. 
• The Authority has granted Mighty River Power Limited an exemption (No. 169) from complying with the obligation to provide half-hour submission information in clause 8(g) of Schedule 15.3 of the Code. 
• The Authority has granted Network Waitaki Limited an exemption (No. 171) from compliance with clause 11.10 (1)(c) of the Code. 
• The Authority has granted Eastland Network Limited an exemption (No. 172) from compliance with clause 1(1)(a) of Schedule 10.5  of the Code. 
These can be found on the exemptions page.

Industry forum on proposed arrangements to manage a retailer default situation and the settlement and prudential security review

This is a reminder that the Authority will hold an industry forum on the consultation papers titled ‘Arrangements to manage a retailer default situation’ and the ‘Settlement and prudential security review’.  The purpose of the forum is to assist consultation submitters to understand the proposals for changes to these components of the wholesale electricity market.

The forum will be held at the Authority on Thursday 18 July 2013, starting at 9:30am and ending at 3:00pm.  Anyone wishing to attend the forum should email conference@ea.govt.nz  by the end of today, 16 July 2013, with ‘Retailer default /SPSR Briefing’ in the subject line.
• Arrangements to manage a retailer default situation
• Settlement and prudential security review. All appendices and a spread sheet to assist submitters in exploring details of settlements under both the weekly and monthly proposals.  This spread sheet will be of particular assistance in detailing how the partial net settlement process would work where one or more participants have defaulted on a settlement day.

Transmission Pricing Methodology: next phase

The Authority intends to develop and publish a series of working papers on key issues of the transmission pricing proposal. The working papers will form a key input into a second issues paper on the TPM proposal. The Authority has identified the following working papers:
• Approach to cost benefit analysis of the TPM proposal
• Definition of sunk costs
• Avoided cost of transmission payments for distributed generation
• Use of loss and constraint excess to offset transmission charges
• Approach to residual charge
• Beneficiaries’ pays approach
The Authority is currently considering the benefits of advancing the static reactive support component of the TPM in advance of the rest of the proposal. If the Authority does decide to advance this aspect of the TPM proposal it would release an issues paper containing draft guidelines for Transpower on static reactive support. An issues paper could be released during the 4th quarter of 2013. The Authority will confirm its approach as soon as practicable.

In order to keep interested parties informed, progress and updates to timelines will be available from the Authority’s website.
• Second issues paper 

Transmission Pricing Methodology: conference questions

The deadline for answers to questions which were raised but not answered at the Transmission Pricing Methodology conference closed on 25 June 2013.
• All responses received by the Authority are now available from the Authority’s website

Part 10 implementation: change “livening” to “electrically connecting” and minor Code amendments

Under the new metering arrangements, “livening” means connecting a new point of connection to a network. Participants have advised the Authority that the word “livening” is confusing as it does not align with the term "enliven" that is already commonly used by the industry.  As a result, the Authority intends to change the defined term from “livening” to “electrically connecting” to avoid any confusion. The definition and obligations will remain unchanged.

Participants have raised a small number of minor operational issues with the new Part 10 since the Authority’s previous consultation on proposed Part 10 Code amendments in March 2013.  The Board considers the Code amendments required to address these operational issues are technical and non-controversial and therefore, under section 39(3)(a) of the Act, the Authority is not required to prepare a regulatory statement for these amendments nor is it required to consult.
• The Code amendments approved by the Board, including the change from “livening” to “electrically connecting”

Summary of submissions on proposed Code amendments to Parts 10 and 11

The summary of submissions for the consultation ‘Proposed Code amendments to the new metering rules and Part 11’ has been published.
• Summary of submissions

Market operations audit review service: request for proposals

The Authority seeks proposals to provide independent review and assistance in managing the audit review process required in Parts 10, 11 and 15 of the Code. 

A request for proposals (RFP) will be issued through open tender and will be available from the Authority website for download on 17 July 2013.

It is also being advertised through the Government Electronic Tenders Service (GETS). Any updates to the tender information will be updated here and in GETS. Note that parties who register interest through GETS will be automatically notified of any updates.

The location for GETS is: http://www.gets.govt.nz/

Proposals will be accepted from 17 July 2013 to 6 August 2013, 4pm.

New fact sheets: Electricity Industry Participation Code

Two fact sheets about the Electricity Industry Participation Code (Code) are the latest in the Authority’s series looking at aspects of New Zealand’s electricity sector:
• The Electricity Industry Participation Code
• Compliance with the Electricity Industry Participation Code
Other fact sheets cover topics including the electricity supply chain, breakdown of a typical bill, price comparisons between different consumer groups and internationally, projecting future costs, and smart meters.
• All fact sheets

Current consultations

Temporary changes to the configuration of the grid

The Authority is seeking feedback on a proposal to amend the Code to enable Transpower to make temporary changes to grid configuration in certain situations. The proposed Code amendment replaces a temporary Code amendment that expires in December 2013 and was introduced to promote efficient levels of reliability.
• Consultation on temporary changes to the configuration of the grid
Started: 11/6/2013; Ending 23/7/2013, 5pm.
Within-island basis risk (WIBR)

The Authority is seeking feedback on a consultation paper ‘Within-island basis risk: proposed approach’ which proposes a multi-point FTR as the preferred approach to assist participants to manage their within-island basis risk. The proposal is based on feedback received from the Locational Price Risk Technical Group and is a key initiative for further enhancing competition in the retail electricity market.
• Within-island basis risk (WIBR)
Started 25/6/2013; Ending 6/8/2013 5pm.
Settlement and prudential security review

The Authority is seeking feedback on a proposal to amend the Code to improve the wholesale market settlement and prudential security system.  The proposed Code amendments are substantially based on the work of the Wholesale Advisory Group, and take into account feedback received from the Settlement and Prudential Security Technical Group.  The proposals in this paper are important for enhancing competition in the retail electricity market.
• Settlement and prudential security review: consultation paper
Started: 18/06/2013; Ending: 20/08/2013, 5pm.
Arrangements to manage a retailer default situation

The Authority is seeking feedback on a proposal to amend the Code to establish arrangements for managing a situation where an electricity retailer does not meet its financial obligations or becomes insolvent (a retailer default situation). The Authority is also proposing to introduce guidelines describing the detailed processes and actions that would be taken if there is a retailer default situation.
• Arrangements to manage a retailer default situation
Started: 18/06/2013, Ending: 20/08/2013, 5pm.
Improving transparency of consumers’ electricity charges

The Retail Advisory Group is undertaking a review of whether there should be more transparency around consumers’ electricity charges. The purpose of the review is to identify and recommend alternatives that promote competition by ensuring consumers have timely access to sufficient information so they can understand their bills, see what is driving price changes and make choices about their retailer.
• Improving transparency of consumers' electricity charges
Started: 9/07/2013, Ending: 20/08/2013, 5pm.
Amendments to the procurement plan

The Authority has published a consultation paper ‘Amendments to the procurement plan’. The majority of the changes proposed by the system operator relate to the multiple frequency keeping provisions in the existing procurement plan.
• Amendments to the procurement plan
Starting: 9/07/2013, Ending: 20/08/ 2013, 5pm.
Aligning forecast and final prices

The Wholesale Advisory Group seeks feedback from interested parties on a discussion paper entitled: ‘Aligning forecast and final prices’. At the request of the Electricity Authority, the Wholesale Advisory Group is reviewing the feasibility, benefits and costs of measures to improve the alignment between forecast and final prices as a way of promoting greater competition.
• Aligning forecast and final prices
Starting: 9/07/2013, Ending:  23/08/2013, 5pm.

NZ electricity hedge contracts - 12 July 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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