28 FEBRUARY

NEW ZEALAND GAZETTE

537

(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;

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 system;⁵
• 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.

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.

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.