4348 NEW ZEALAND GAZETTE No. 166

Release of wholesale market information

15. The Governance Board should ensure that information on offers by generators for dispatch (including ancillary services) is released publicly after three months.

Spill from hydro dams

16. The Governance Board should ensure that quarterly information is made available on the amount, timing, location, and reasons for, spill within four weeks of the end of each quarter.

Forward electricity price curve

17. The Governance Board should ensure that aggregate information on hedge prices is made available, and should take steps to promote the development of trading markets that discover forward prices for electricity.

Real time market

18. As a first step toward promoting active demand-side participation, the Governance Board should move urgently to implement real time dispatch prices so that the demand side can see and respond to real time market prices. The Board should also explore and consider any other opportunities for stronger demand-side participation in support of the Government’s overall objectives.

Projections of system adequacy

19. The Governance Board should facilitate arrangements for the preparation and release of short and medium term projections of system adequacy, covering issues such as forecasts of energy and reserve availability and transmission outages, to ensure that industry participants are fully informed on factors likely to affect prices.

Financial instruments to manage transmission risk

20. The Government supports the development of innovative financial instruments, such as financial transmission rights, so that market participants can better manage risk in respect of transmission losses and constraints.

Transmission Issues

21. Transmission has strong natural monopoly characteristics. This makes it important that the Government set out its policy expectations as to how transmission services should be provided and priced and how Transpower should operate.

22. The Government’s expectations in this regard are specified in the objectives and principles for the provision of transmission services set out in Attachment 1 to this Policy Statement. Transpower’s statement of corporate intent will be modified in due course to reflect the new objectives and pricing principles.

23. Transpower will be responsible for developing the transmission pricing methodology consistent with the objectives and principles for the provision of transmission services outlined in Attachment 1. The Governance Board should ensure that consistency with the objectives and principles has been achieved. The Governance Board is also to ensure that transmission charges established consistent with the transmission pricing methodology are enforceable on the same basis as other rules set by the Governance Board.

24. As a safeguard in case the Governance Board and Transpower are unable to agree on a satisfactory transmission pricing methodology, the Government proposes that a provision be included in legislation to ensure that the Government can empower the Commerce Commission to determine the transmission pricing methodology. If the transmission methodology is established by the Commission, Transpower’s charges would be recoverable as a debt.

Distribution and Retail Issues

25. The Governance Board should:

• develop model approaches to distribution pricing;
• draw up model Use of System agreements for use of distribution lines, ensuring that the interests of retailers and users are given weight equal to that of line distribution companies (the model Use of System agreements should include the terms and conditions for connecting distributed generation to the network);
• ensure that terms and conditions for connection of distributed generation to networks is included within the model distribution pricing methodology and that these terms and conditions are subject to dispute resolution under the new rules;
• take responsibility for the enforcement and any future development of the protocols for consumers to switch retail suppliers;
• establish arrangements to ensure an orderly transition for end users in the event that a retail company becomes insolvent;
• develop rules to ensure that all retailers serving more than 25 per cent of the market for domestic consumers in a line network area, measured by the number of consumers to whom profiling applies, must offer pre-payment meters to domestic consumers at reasonable cost; and
• draw up a model contract for domestic consumers, in consultation with the Ministry of Consumer Affairs and consumer representatives. The following features are to be designed into the model contract:
  • transparency of charge components;
  • frequency of billing;
  • company-specific arrangements for dispute resolution6;
  • arrangements for consumer protection with respect to outages;
  • the arrangements mentioned above for an orderly transition for end users in the event of insolvency of a retailer;
  • arrangements mentioned above on the availability of prepayment meters to domestic consumers at reasonable cost.

26. The Government expects distribution companies to keep changes to rural line charges in line with urban line charges and will monitor developments in rural charges.

6 Such company-specific arrangements are also required as a component of the development of the industry-wide consumer complaints resolution system.