Electricity Commission submissions archives
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2009
Summary
In this submission we:
- fully endorsed the Commission’s proposed principles based approach to distribution pricing, underpinned by information disclosure
- commented on minor administrative and technical aspects of the proposal
- answered the Commission’s specific questions.
Summary
In this submission we:
- considered that either option 3 (publishing charge components on the Commission's website with retailer phone support) or option 4 (Commission disclosure of charge components) would be workable
- preferred option 3, with a slight variant that would have the information proposed presented on the MED website and have retailers publicise the existence of the information once a year, but not necessarily on invoices
- commented on each of the five proposed options
- answered the Commission's specific questions.
Summary
In this submission we:
- were encouraged to see significant consideration being given to options to encourage demand side participation
- urged caution in any analysis that assumes current bidding behaviour provides meaningful price information
- noted that it is possible that most customers prefer fixed price variable volume contracts, as is the case with many of Orion’s larger customers
- commented on the four dispatchable demand options
- disagreed that options 1 and 2 were the best candidates for further investigation
- suggested that more than one option may be appropriate, depending on the nature of the participants
- expressed our surprise at the lack of analysis of implementation issues arising from the options, and emphasised that implementation costs need to be taken into account before any final decisions are made around demand side participation
- considered that the paper does not adequately consider the maintenance of load stability
- provided responses to the Commission’s specific questions.
Summary
In this submission we:
- support the new approach. In particular the separate guidelines on arrangements to assist medically dependent and vulnerable consumers, however we outline several areas where the guidelines are not consistent.
Summary
In this submission we:
- were pleased to see that the Commerce Commission and the Electricity Commission generally agreed that a principles-based approach to pricing was appropriate, rather than a prescriptive model-based approach
- considered that, despite the acknowledged differences in the legislative objectives of the Commissions, those differences were not so great that it would be unreasonable for EDBs to expect a single set of pricing principles and that the Commissions use a single compliance process
- commented in detail on the Commission’s proposed pricing principles
- noted that the proposed methodological requirements were not necessary – instead, guidance should be provided to assist EDBs with the content of their pricing methodology disclosures
- did not support the Commission’s proposed compliance process, and instead recommended an alternative compliance process based on the Commerce Commission’s AMP disclosure requirements.
Summary
In this submission we:
- did not agree with the Commission’s preferred approach of a retail delivery model (RDM), as the Commission did not present a compelling case for a single model, or for RDM as that model
- considered that the paper had misconceived the wholesale delivery model (WDM) and misinterpreted RDM as envisaged by the Pricing Approaches Working Group (PAWG)
- recommended that the Commission adopt a set of principles that electricity lines businesses (ELBs) should take into account when developing their own pricing methodologies, and that the Commission should use the Commerce Commission’s pricing principles as a starting point
- noted that the pricing principles should be consistent with the preliminary views of the Commerce Commission that, in relation to default price-quality paths (DPPs), the costs associated with applying pricing methodologies to DPPs may outweigh the benefits and, in relation to customised price-quality paths (CPPs), that a principles-based approach to pricing methodologies is appropriate for ELBs
- submitted that the prescriptive nature of the Commission’s proposed pricing methodology would remove incentives for ELBs to develop innovative pricing methodologies and products that would promote the long term benefits of customers, as required under section 52A of Part 4 of the Commerce Act
- concluded that while there may be a case for rationalising distribution price structures, the primary focus of the Commission’s review should be to establish what barriers prevent ELBs from rationalising legacy pricing methods or innovating.
Summary
In this submission we:
- supported the Commission’s aim to stop the scope of the guideline from extending into other areas such as generic affordability issues and health issues associated with warm homes
- agreed with the Commission’s proposal to remove the reference to “low income” as a subset of “vulnerable customer”
- did not agree that the definition of vulnerable customer should be extended to include “severe financial insecurity”
- expressed our concern that the proposed definition of vulnerable customer, together with the policy objective to “minimise avoidable disconnection activity for all consumers”, would lead to a ‘blow out’ of the scope of the guideline to include the very issues that the Commission identified it wanted to avoid
- suggested that the definition of “medically dependent vulnerable customer” should be revised
- considered that the guideline should include a section on the Ministry of Health/DHB’s processes in relation to issuing a “Notice of Dependency on the Electricity to Power Critical Medical Equipment”.
2008
Summary
In this submission we:
- emphasised that security of supply is extremely important to both customers and the electricity industry
- supported the need for a planned and coordinated industry response to those low-probability, high-impact situations that could lead to the need for rolling outages
- expressed our concern that the Commission had yet to appropriately address the issue of liabilities faced by distributors in complying with the proposed regulations
- were pleased to see that the Commission had addressed, to some extent, our earlier issues in relation to automatic under-frequency load shedding (AUFLS), however we remained concerned about the practicalities of implementation.
Summary
In this submission we:
- expressed our concerns about the proposed changes in relation to responsibility for retailers’ wholesale market obligations
- questioned the Commission’s preferred option which would enable a “responsible participant” to assume a retailer’s wholesale market obligations for operations, trading and settlement
- recommended that the Commission consider the issue in greater detail with an aim to simplify the Electricity Governance Rules, rather than add further complication to an already complex set of rules
- recommended that the Commission adopt an arrangement that provides for transparent information to distributor participants of the electricity sales by individual retailers at the GXP level.
Summary
In this submission we:
- questioned the proposed process timeline in light of the required rule changes
- expressed our concerns at the Commission’s response to submissions that lines businesses would be unable to recover costs incurred in meeting clause 4.4 under the price control regime administered by the Commerce Commission – we do not consider that the Commission should adopt a hands-off approach in this manner
- supported Vector’s approach in relation to encouraging efficient investment in reactive compensation equipment via a pricing mechanism, supplemented by realistic minimum power factor requirements
- reiterated our earlier recommendation that Transpower should consider the use of network connected capacitors as a transmission alternative, as it is inappropriate to mandate power factor correction to a specific value.
Summary
In this submission we:
- supported the need for a review of Part D of the Electricity Governance Rules
- suggested that a clear focus of the review must be to manage the transition to widespread use of advanced meters
- recommended that fundamental issues raised in the paper should be given separate consideration – particularly the allocation of metering infrastructure responsibility to local network owners
- considered that the paper’s ‘guiding principles’ should be enhanced in several areas, including protection of consumers’ interests
- reiterated that load control of appliances such as domestic hot water cylinders is currently essential for New Zealand’s electricity system security – as such electricity lines businesses need to maintain ability to control such loads
- provided detailed answers to the Commission’s specific questions.
Summary
In this submission we:
- strongly disagreed with standardisation of network pricing structures and terms
- considered that the changes required to address the current situation were beyond the scope of the review, given that significant structural change options had been excluded
- recommended that the Commission instigate a technical working group to further consider the issue
- reiterated earlier submissions about demand-side participation, including the recommendation that distributors should have sole discretion over when ripple systems could be used
- included a report from NERA Economic Consulting which considered the impact of the Whirinaki reserve energy plant on investment incentives in peaking capacity.
Summary
In this submission we:
- agreed that an information guide would provide a basis for a more consistent approach, enhancing the reliability and usefulness of information
- expressed our concern that the guide had gone well beyond the role of the registry pricing fields, which is to convey information on delivery pricing to retailers and prospective retailers to enable them to formulate and apply a competitive retail offering
- emphasised that any desire to standardise the use of pricing codes should not be interpreted as a desire to standardise or dilute cost-reflective pricing structures or commercial arrangements
- provided detailed answers to the Commission’s specific questions
- provided detailed comments on individual clauses of the guide.
Summary
In this submission we:
- expressed our concern about the timing of the consultation, as some electricity distributors had already arranged an audit (participants who had acted promptly to obtain an audit could be disadvantaged if later audits were conducted under revised guidelines)
- also expressed concern that the Commission had recently consulted on a set of proposed changes to the reconciliation rules, some of which could significantly impact on the processes referred to in the audit guidelines
- considered that separating the guidelines into two parts (for distributors and reconciliation participants) would be useful, although some issues would need to be addressed
- detailed our concerns about some aspects of the audit requirements.
Summary
In this submission we:
- considered that many of the proposed changes improved the clarity of the rules, however further work was required – particularly in relation to the rules around creation or decommissioning of NSPs and providing advice to participants and service providers
- expressed our ongoing disagreement with many of the rules as implemented
- commented on the proposed changes with the intention of improving the rules as they stand.
Summary
In this submission we:
- noted that while the purpose of the consultation (to align various model contracts) could be useful, most of the relevant documents were ‘model’ agreements and any ‘alignments’ could vary in actual contracts compared to the various models
- outlined various issues in relation to ongoing development and retention of model contracts
- provided detailed responses to the Commission’s specific questions.
Summary
In this submission we:
Summary
In this submission we:
- supported the concept of secondary networks, together with the need for additional guidance on how they are managed
- noted that as the guidelines were incomplete, our ability to comment meaningfully was limited
- suggested some changes to the guidelines.
Summary
In this submission we:
- expressed our concerns about the Commission's response to our earlier submission on this issue
- recommended some limitations to the scope of any mandatory asset testing regime.
2007
Summary
In this submission we:
- emphasised that security of supply is the key issue
- acknowledged that the paper has identified some useful areas for future work.
Summary
In this submission we:
- emphasised that the proposed connection code does not reflect a fair and reasonable balance between the requirements of designated transmission customers and the legitimate interests of Transpower
- expressed our concern that the proposed code strays into areas already covered by the Electricity Governance Rules
- considered that some clarification of the outage protocol is needed
- recommended that it is inappropriate to mandate power factor correction to a specific value. Transpower should consider the use of network connected capacitors as a transmission alternative.
Summary
In this submission we:
- agreed with the Commission's proposal to publish the revised market administrator report monthly by the 15th business day of each month
- suggested that the Commission consider whether the delay in publication could have an adverse effect on participants in the case of a serious breach.
Summary
In this submission we:
- discussed how distributors in New Zealand aggregate load effectively and efficiently
- submitted that distributors should coordinate and prioritise load management
- emphasised that pricing alone is insufficient to control load - direct control is needed to minimise the impact on any one group of consumers
- suggested a way forward for the Commission.
Summary
In this submission we:
- expressed our concerns about the proposed schedule 9
- provided an amended draft of schedule 9.
Summary
In this submission we:
- considered that the guidelines provide a useful check list of parties' obligations
- suggested some amendments to clarify the guidelines.
Summary
In this submission we:
- supported the key focus of the compliance framework on self-reporting and settlement
- emphasised that in this kind of framework there must be consistency, transparency and a pragmatic balance that recognises that reliance on reporting and settlement will not be appropriate in all circumstances.
Summary
In this submission we:
- expressed our concerns at changes to definitions at a late stage in the Commission's consultation process
- emphasised that some short-term transitional arrangements would be needed, particularly in relation to Transpower's provision of data
- considered it essential that the status quo be maintained in relation to availability and reliability service measures at a point of connection rather than a point of service.
Summary
In this submission we:
- recommended a process to calculate loss factors and use them for reconciliation purposes
- emphasised that distributors should be responsible for technical losses only - the balance of unaccounted for energy (UFE) is the retailer/purchaser's responsibility.
Summary
In this submission we:
- supported advanced metering
- noted that in New Zealand advanced metering is already being installed without the need for regulatory intervention
- identified key outcomes of advanced metering systems.
Summary
In this submission we:
- considered it challenging to try and compare market data on an international basis. In general, the significant differences in overseas regulatory systems, together with the diversity of the markets involved, undermines the value that can be drawn from any international comparisons
- noted that in relation to security of supply, it may be more meaningful for the Commission to consider the underlying drivers of quality and security of supply – that is, appropriate asset management planning based on best practice, rather than look at international comparisons
- emphasised that it is important that participants take responsibility for providing accessible, quality information to their customers.
Summary
In this submission we:
- submitted that generation used within an ICP should not be viewed as being sold to a trader
- recommended that the Commission’s proposal outlined in the paper should be rejected for a range of reasons, including that it would undermine the economics of embedded generation and demand-side management.
Summary
In this submission we:
- supported Transpower's efforts to investigate transmission alternatives
- suggested that if the Commssion approved the IGE application, significant demand-side participation could be found and the 2008 trial could show that transmission investment could be delayed by at least one year.
Summary
In this submission we:
- emphasised that new rules for mandatory asset testing are not required as requirements for testing already exist and appropriate testing is carried out
- suggested that the system operator produce an asset testing explnatory guide to assist asset owners.
Summary
In this submission we:
- submitted that Transpower's future pricing must include high-quality real-time ex-ante loading information for the customer so that the customer can know when electricity delivery costs are high
- emphasised that the highest half hour peak periods for the year in a region may not coincide with times of regional transmission constraint. Therefore, distributors require additional information from Transpower on when load reduction is most beneficial, otherwise distributors will control load only for the highest peak loads in a region and may not reduce load at other times when transmission is constrained.
Summary
In this submission we:
- emphasised that there should be only one approved consumer complaints resolution scheme
- provided detailed responses to the Commission’s specific questions.
Summary
In this submission we:
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agreed that the draft transmission pricing methodology (TPM) improved the existing TPM
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supported the aggregation of grid exit points into larger regional group loadings
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supported the Commission’s acceptance that demand-side management is useful as a means to delay investment
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suggested that some areas of the TPM needed further work.
2006
Summary
In this submission we:
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supported the Commission’s overall intention for energy efficiency and the total appropriation sought from the Minister
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suggested that the Commission should further the test the economic value of the proposed expenditure on compact fluorescent lights.
Summary
In this submission we:
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outlined our concerns about how the ‘minzone’ is to be calculated
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suggested that additional scenarios should be modelled to give participants confidence. These additional scenarios should model extreme scenarios such as bigger thermal plant outages and high energy forecasts rather than mean energy forecasts.
Summary
In this submission we:
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supported the proposed rule change that would require the pricing manager to publish the previous day’s daily demand data for each trading period by 10 am the following day
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identified some further issues for consideration in relation to this rule change.
Summary
In this submission we:
- agreed in general with the proposed rolling outages regulations and the Commission's security of supply outage plan
- supported the distinction between grid emergencies and rolling outages
- commented in detail on aspects of the regulations and plan which we considered needed to be further refined or amended.
Summary
In this submission we:
- agreed in general with the Commission's short-term prudent peak forecast methodology as a basis for transmission planning
- encouraged the additional demand scenario analysis undertaken by the Commission and noted that we would like to see the results used to better understand the relationship between long-term energy and peak demand growth.
Summary
In this cross-submission we:
- reiterated our previous concerns about the Commission's proposal to reduce the prudential requirements that Transpower could apply to its customers
- submitted that while a party should have the right to take a commercial dispute of a technical nature to the rulings panel, we considered it inappropriate for parties to the benchmark agreement to face claims under the agreement and also under the Electricity Governance Rules, arising from the same action
- asked the Commission to clarify this area, and also consult further on its proposed approach to give counterparties greater decision-making rights.
Summary
In this submission we:
- emphasised that the Commission needed to consult further on the transmission benchmark agreement, and that the transmission pricing methodology, benchmark agreement and interconnection rules should be implemented at the same time
- suggested that the nearest practical implementation date would be 1 April 2008.
Summary
In this submission we:
- agreed with the Commission's asset availability approach for asset connection services, as that approach would enable alternative solutions to better compete with Transpower's proposed grid upgrades
- agreed that interconnection services should be addressed in the Electricity Governance Rules.
Summary
In this submission we:
- requested that the Commission consult further, given the detailed nature of the issues and the fact that an 'outage protocol' and 'connection code' had not yet been developed
- expressed concern about the proposed reduction in prudential requirements that Transpower could apply to its customers and raised concerns about various other aspects of the proposed benchmark agreement.
Summary
In this submission we:
- noted that adding embedded generation data to the dataset might not help to identify the electrical loads behind grid exit points; however we had no objection to this addition provided that certain criteria were met.
Summary
In this submission we:
- commented on the 'competitive activity' section of the Commission's consultation paper, as we considered this key to whether competitive retail activity existed
- recommended that the key indicators of competitive activity should include new metering technologies for consumers and new price structures with demonstrated customer uptake.
Summary
In this submission we:
- recommended that the Commission change some elements of the draft guidelines to ensure that the economics of local standby and renewable generation plant were not undermined and that the potential use of generation for South Island dry year reserve was not diluted.
Summary
In this submission we:
- commented in detail on the Commission's proposed rules for the reconciliation process.
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