14 DECEMBER NEW ZEALAND GAZETTE 4347

Transmission

• transmission pricing methodology⁴;
• minimum security standards;
• common quality and real-time security;
• system expansion and replacement;

Distribution

• terms and conditions for connection of distributed generation to distribution lines;

Retail

• consumer switching protocols;
• consumer complaints resolution system⁵;
• transition arrangements for consumers in the event of retailer insolvency;
• availability of pre-payment meters;

Governance

• rule-making; and
• enforcement including alternative dispute resolution and an effective independent surveillance body.

8. The Governance Board should ensure that rules are developed in a timely manner. The rules and changes to them are to be determined after appropriate consultation.

9. Compliance with the rules will be compulsory for generators, distributors, retailers, directly connected end-users and Transpower, to the extent that they are applicable to these parties, and to the extent necessary to give effect to Government policy in this Government Policy Statement.

10. The Governance Board should also ensure that non-mandatory ‘model’ arrangements, consistent with the Guiding Principles, are developed in the following areas. These will then be available for consideration by distribution and retail companies in developing their own approaches.

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

Distribution

• model Use of System agreements for distribution;
• model approaches to distribution pricing; and

Retail

• model domestic consumer contracts.

Constitution of the Governance Board

11. The Government expects the industry to establish a constitution for the Governance Board reflecting the following principles:

Key Design Principles for the Governance Board’s Constitution

• The Governance Board should comprise between five and nine members (including the chair).
• There must be an independent chairperson.
• The prime obligation of Governance Board members should be to develop and enforce rules consistent with the Guiding Principles; they must not act in the interests of individual participants.
• Governance Board members should demonstrate background and expertise to enable them as a group to give effect to the Guiding Principles. In particular, at least some members should be able to contribute expertise and experience in the following areas: consumer interests, distributed generation/renewables, energy efficiency/demand side management, generation, network management and transmission. All members should be aware of the interests of consumers.
• A majority of the Governance Board should be independent persons. (Any director, employee or significant shareholder of the supply side of the industry does not meet the test of independence.)
• The independent members of the Governance Board should be appointed after consultation with the Minister of Energy.

Wholesale Market

Contestable service provision
12. The Governance Board should be responsible for determining the services to be provided to the market, which should be contestable wherever possible.

Competing market arrangements
13. The new governance framework should not preclude the establishment of any competing arrangements consistent with unified security constrained dispatch and consistent with this Government Policy Statement and the Guiding Principles.

Market surveillance arrangements
14. The new governance framework should provide for an effective and independent market surveillance body to monitor compliance with and enforce rules. The body should be able to obtain all the information it requires, recommend changes to the rules to the Governance Board and have access to dedicated resources. It should proactively investigate potential breaches of market rules.

⁴ The respective roles of Transpower’s Board and the Electricity Governance Board in relation to transmission pricing methodology are spelt out in paragraph 23.

⁵ The consumer complaints resolution arrangements are to cover distribution and retailing.