4346 NEW ZEALAND GAZETTE No. 166

(e) the quality of electricity services, and in particular trade-offs between quality and price, should as far as possible reflect customers’ preferences;

(f) transmission losses and constraints are signalled to ensure that overall costs to the economy, including the costs of insufficient competition in local regions, are minimised; and

(g) greenhouse gas emissions are minimised.

To meet these objectives and outcomes, an Electricity Governance Board is to ensure that rules are developed as set out in this Government Policy Statement. The rules are to be consistent with these Guiding Principles. In particular, the rules are to:

(h) promote enhanced competition wherever possible and, where it is not, seek outcomes that mirror as far as possible those that would apply in competitive markets;

(i) facilitate and promote active demand-side participation;

(j) ensure that the use of new electricity technologies and renewables, and distributed generation, is facilitated and that generators using these approaches do not face barriers; and

(k) be consistent with government policies on climate change and energy efficiency.

Greenhouse gas emissions are to be minimised through these arrangements, in particular by minimising hydro spill, efficiently managing transmission losses and constraints, ensuring consistency with climate change and energy efficiency policies, promoting demand-side participation and facilitating new generation technologies and renewables.

The Electricity Governance Board should also ensure that:

(l) services that are most efficiently provided on a common basis are provided at a quality and quantity, set through a process of collective agreement with participants, which enables those participants to make trade-offs between alternative levels of service and price;

(m) the range of common services and mandatory rules is reduced over time where technological developments challenge the efficiency of ongoing compulsion;

(n) the provision of services is contestable wherever possible;

(o) rules and standards are robust and enforceable through a supervisory body that is neutral, separate from the body responsible for rule-making, and has sufficient power to monitor and enforce the rules (including fines for rule breaches);

(p) where appropriate, efficient and effective alternative dispute resolution processes are provided;

(q) processes by which rules are set and changed:

✓ are transparent;

✓ do not provide for or allow bias towards any party and, in particular, limit the potential for any party to amend rules in a manner which introduces bias inconsistent with these Guiding Principles; and

✓ achieve a balance between providing certainty and the need to ensure that progress in setting and amending the rules meets the Government’s expectations for rapid evolution of the market; and

(r) the Commerce Act 1986 and all other relevant laws are observed.

New Electricity Governance Board

6. A new governance structure with a single Electricity Governance Board (‘the Governance Board’) should be established. The new structure and Governance Board should replace the existing governance arrangements of NZEM¹, MARIA² and MACQS³. The Governance Board will also have some additional responsibilities as set out in this statement.

Role and functions of the Governance Board

7. The Governance Board should ensure that rules are developed in the areas listed in the following table. The rules will need to be consistent with the Guiding Principles.

The Governance Board should ensure that rules, consistent with the Guiding Principles, are developed in the following areas:

Wholesale market

• dispatch;
• pool rules;
• reconciliation;
• settlement;
• information disclosure covering:
  ✓ spill from hydro dams;
  ✓ aggregate hedge prices; and
  ✓ release of offers by generators;

¹ New Zealand Electricity Market, the multilateral agreement under which most wholesale electricity is bought by retailers and sold by generators on a half-hourly basis.
² Metering and Reconciliation Information Agreement, is a set of rules around metering and reconciliation standards that allow electricity flows to be matched against contracts. It also contains profiling and switching rules that allow consumers to change retailers.
³ The new Multilateral Agreement on Common Quality Standards, which transfers responsibility for common quality and real-time security to users of grid services.