Summary of Submissions

Prepared for the Ministry of Economic Development by Corydon Consultants Ltd

November 2001

ISBN 0-478-24277-3

This document is also available in Adobe Acrobat format (259 KB)
(instructions for obtaining the viewer)

Contents

• Introduction
• The Submissions Process
• Report Structure
• Summary of Key Points
• 1. What Factors Contributed to Wholesale Electricity Market Developments in the 2001 Winter?
• 2. How Effective Were Existing Market Arrangements in Responding?
• 2.1 Overview
• 2.2 Supply Side
• 2.3 Demand Side
• 2.4 Transmission
• 2.5 Risk Management Instruments
• 2.6 Retail Competition / Market Power / Vertical Integration Issues
• 2.7 Other Market Arrangement / Design Issues
• 2.8 Ownership Issues
• 3. What Changes Should Be Made to Market Arrangements?
• 3.1 Overview
• 3.2 Supply Side
• 3.3 Demand Side
• 3.4 Transmission
• 3.5 Risk Management Instruments
• 3.6 Retail Competition / Market Power / Vertical Integration Issues
• 3.7 Other Market Arrangement / Design Issues
• 3.8 Ownership Issues
• 3.9 Contingency Planning
• 4. What Changes to the Energy Efficiency and Conservation Campaign Should Be Considered?
• 1. What Factors Contributed to Wholesale Electricity Market Developments in the 2001 Winter?
• Summary of Key Points
• 1.1 Drought
• 1.2 Increased Demand
• 1.3 Exacerbating Factors
• 2. How Effective Were Existing Market Arrangements in Responding to These Developments?
• 2.1 Overview
• Summary of Key Points
• Did the Market Respond Effectively to the Events of Winter 2001?
• Did Wholesale Market Prices Impact Unfairly on Large Industrial Consumers?
• Was There Insufficient Appreciation of Risk By Purchasers?
• 2.2 Supply Side
• Summary of Key Points
• New Zealand's Dependence on Hydro-Electricity
• Management of Hydro Resources by Generators - In the Public Interest?
• Concerns about Hydro Spill
• Impacts of RMA Requirements on Hydro Generation
• Response of Thermal Generators during Winter 2001
• Inadequate Reserve Capacity and Inadequate Incentives for Investment
• Barriers to New Renewable Generation
• Barriers to Distributed Generation
• 2.3 Demand Side
• Summary of Key Points
• Many Consumers Are Shielded from Price Signals
• Limited Demand Responsiveness to Price Signals
• Barriers to Demand Side Participation
• 2.4 Transmission
• Summary of Key Points
• Transmission Constraints - Barriers to an Efficient Market
• Transmission Losses
• Transmission Rentals
• Adequacy of Investment / Incentives
• Concerns about Monopoly in Transmission
• 2.5 Risk Management Instruments
• Summary of Key Points
• Hedge Availability
• Ineffectiveness of the Secondary Hedge Market
• Unavailability of Transmission Risk Hedging Instruments
• 2.6 Retail Competition / Market Power / Vertical Integration Issues
• Summary of Key Points
• Lack of Effective Retail Competition
• Vertical Integration
• Regionalisation - Exacerbating Competition Problems Associated With Vertical Integration?
• Generator Domination of the Market
• Did High Spot Prices Reflect Generators' Market Power?
• Effects of Market Power In The Industry
• Market Power Issues - A Matter for the Commerce Act
• 2.7 Other Market Arrangement / Design Issues
• Summary of Key Points
• Access to Market Information
• Transmission Costs and Dispatch Methods
• Marginal vs. Average Cost Pricing
• 2.8 Ownership Issues
• Summary of Key Points
• 3. What Changes Should Be Made to Market Arrangements, Why Are These Changes Recommended and What Are the Costs and Benefits?
• 3.1 Overview
• Summary of Key Points
• Greater Market Regulation in the Public Interest?
• 3.2 Supply Side
• Summary of Key Points
• Encourage New Generation (General)
• Diversify Generating Capacity
• Encourage New Renewable Generation
• Encourage New Reserve Generation
• Signals to Prompt Entry of Reserve Generation
• Review Behaviour of Thermal Generators
• Increase Competition among Generators
• Facilitate Distributed Generation
• Relax RMA Constraints on Hydro Generation
• Reduce Waste in Generation and Delivery (Including Hydro-Spill)
• 3.3 Demand Side
• Summary of Key Points
• Improve Price Signals to Consumers
• A Real Time Market (RTM) to Improve Demand Side Participation
• The 2 Hour Rule
• Better Management of Load through Local Lines Networks
• Update Local Distribution Technology
• 3.4 Transmission
• Summary of Key Points
• Address Transmission Constraint / Security Risks
• Facilitate Transmission Investment
• Investigate Inequities in Transmission Rental Rebating
• Ownership / Governance of Transmission
• 3.5 Risk Management Instruments
• Summary of Key Points
• Mandatory Hedges (Countering the "Natural Hedge" Strategy)
• Develop Long-Term Contracts
• Financial Transmission Rights (FTRs)
• 3.6 Retail Competition / Vertical Integration / Market Power Issues
• Summary of Key Points
• Address Problems with Vertical Integration
• Competition - Pricing Issues
• 3.7 Other Market Arrangement / Design Issues
• Summary of Key Points
• Review / Reform NZEM Rules / Electricity Market Structure
• Suggestions about the Electricity Governance Board (EGB)
• Market Information (General)
• Climate Information (Specific)
• Review the Marginal Clearing Price System
• Establish an Ex-Ante Wholesale Market
• Cap Prices
• 3.8 Ownership Issues
• Summary of Key Points
• 3.9 Contingency Planning / Establishing "Triggers"
  • Summary of Key Points
• 4. What Changes to the Energy Efficiency and Conservation Campaign Should Be Considered in Case the Need Arises in Future for a Similar Campaign?
• Summary of Key Points
• Support for the Savings Campaign
• Explore the Lessons of 2001
• Improve Quality of Demand Information Available
• Problems with the Measurement of Savings during Winter 2001
• Specific Energy Saving Suggestions
• Need for a Long-Term Focus
• Appendix 1: List of Submitters
• Initial Submissions
• Cross-Submissions

Top of Page

Email: info@winterreview.govt.nz

Comments about this website should be sent to webmaster@winterreview.govt.nz

Page Last Modified: 03 January 2002