New Super-peak Hedge Contract Available

Trading in the new standardised super-peak hedge contract will start in January 2025 and will help wholesale market participants better manage spot price risk during peak demand periods and when there may be limited availability of intermittent generation such as solar and wind.

The industry-designed flexibility product was developed as part of a package of initiatives being considered by the Energy Competition Task Force (Task Force), jointly established by the Electricity Authority (The Authority) and Commerce Commission, to investigate ways to improve the performance of the electricity market.

Shaun Goldsbury, Chair of the Standardised Flexibility Product Co-design Group (Co-design group) says: "A super-peak hedge contract has a wide range of potential buyers and sellers, with various types of generation, retailers and industrial customers all potentially using the product. This fills a need not currently offered in the exchange-traded contracts on the ASX, which do not include super-peak products for New Zealand electricity."

The Authority established the Co-design group in September 2024 with members from across the sector to develop flexibility products for the wholesale electricity market.

The introduction of standardised flexibility products is one of four initiatives being considered by the Task Force under Package One to enable new generators and independent retailers to enter and better compete in the market. It also delivers the Market Development Advisory Group’s Recommendation 8 to improve price discovery and competition in flexible supply.

The Authority’s recently released Risk Management Review confirmed the value of better price discovery for super-peak hedge contracts to support retail competition.

Notes:

The Energy Competition Task Force was established by the Commerce Commission Te Komihana Tauhokohoko and Electricity Authority Te Mana Hiko in August 2024 to investigate ways to improve the performance of the electricity market.

The Task Force is considering eight initiatives that will encourage more and faster investment in new electricity generation, boost competition, enable homes, businesses and industrials to better manage their own electricity use and costs, and put downward pressure on prices.

The Electricity Authority is an independent Crown Entity with the main statutory objective to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers. The additional objective of the Authority is to protect the interests of domestic consumers and small business consumers in relation to the supply of electricity to those consumers.

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