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Market Development Programme (MDP)

The Electricity Commission has established a Market Development Programme to draw together and prioritise initiatives that are focused on improving the performance of the electricity market.

Most of the core elements of the current New Zealand market design have been in place since the mid-1990s. This programme marks the most significant step to change the existing market design since then.

The programme integrates the outputs of two Commission reviews - the Market Design Review and the Winter 2008 Review - and also draws on the outcome of the Commerce Commission investigation into the electricity market. The programme is likely to also take into account recommendations from the Ministerial Review that is now underway.

The Ministerial Review’s Technical Advisory Group has been briefed on the MDP (see MDP presentation pdf [281 KB]). They have indicated a general comfort with the direction of the work and interest in the work proceeding.  

The Commission will involve the new Advisory Groups in the process. In some cases it will be necessary to form technical groups from a range of interested parties.

The Commission has published an MDP Overview Paper to provide an outline of the issues and the Commission’s proposed solutions.

 

 

Priority projects of the Market Development Programme

The MDP includes the following projects:

Scarcity Pricing and Compulsory Contracting

Locational Hedges/Managing Locational Price Risk

  • The Locational Hedges project seeks to develop and implement an effective mechanism that will allow participants to better manage locational price risk to increase retail competition and improve hedge market liquidity.

Future of Whirinaki and the Reserve Energy Scheme

  • Determine whether Whirinaki should be removed from the Reserve Energy Scheme and, if it is, under what conditions. This project is conditional, depending on the Scarcity Pricing and Compulsory Contracting project.

Strengthen monitoring and information provision

Transmission and distribution pricing reviews

  • The Transmission Pricing Review will review the allocation of transmission costs to enable efficient use of, and investment in, transmission assets, and to provide a coherent signal through the electricity value chain.
  • The Distribution Pricing Review is establishing model approaches to distribution pricing.

Improving demand-side participation

Instantaneous reserves market

  • Determining if interrupting residential hot water load utilising frequency sensitive relays can be used to reduce procured instantaneous reserves quantities and costs.

Improve frequency keeping market

  • Develop a system to coordinate multiple frequency keepers including a national based market instead of an island-based market.

 

There are a number of other related projects within the Commission's workplan - for example the review of Part D - that are important for facilitating market development.

Market Development Programme conference

The Commission held a Market Development Programme (MDP) conference on 29 October 2009 to provide an overview of the MDP consultation documents listed below and an opportunity for industry participants to discuss the options:

The following overview presentations were made at the conference:

The presentation on Managing Locational Price Risk: Options, references a paper by David McLellan entitled "Locational Risk Hedging - Assessment of Options".

Last update on 06 November 2009 10:46 AM