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Wholesale pricing issues

Delay the publication of final prices for 29 April 2007


On 30 April 2007 the Commission ordered the delay of the publication of final prices and final reserve prices for trading period 37 of 29 April 2007. This was because of unprecedented prices being calculated in the Wellington, Wanganui, Wairarapa and central and lower Hawkes Bay regions.

Update 4 - 1 June 2007

The Commission has granted an exemption to the pricing manager to allow calculation of the final prices for trading period 37 on 29 April 2007 using the new high spring washer pricing situation methodology.

Prior to granting this exemption the Commission considered the eight submissions below. The Commission briefly comments on the concerns raised in some submissions.
Submissions received

Update 3 - 21 May 2007


On Friday 18 May 2007 the Commission announced its intention to grant an exemption pdf [105 KB]  to the pricing manager to allow prices for trading period 37 on 29 April 2007 to be calculated using the same high spring washer pricing methodology as that which will apply from 3 September 2007.

A market participant has requested more detailed information on the likely prices that would result if the exemption were granted. It is recognised that this information might assist those wishing to make a submission.

Update 2 - 18 May 2007


The Commission published the pricing manager’s report into the calculation of these prices in the Commission Update of 4 May 2007.

The calculated prices were caused by a high spring washer pricing situation. New rules governing the calculation of prices in a high spring washer pricing situation have been gazetted and will come into force on 3 September 2007. Had these rules been in place on 29 April 2007 the prices would have been significantly different.

The Commission’s assessment is that these prices, if published as final, would have a significant impact on some participants.   Accordingly, it intends to grant an exemption to the pricing manager to allow prices for trading period 37 on 29 April 2007 to be calculated using the same methodology as that which will apply from 3 September 2007.
Participants are requested to provide any views on the granting of this exemption by 5pm Friday 25 May 2007. Please send any comments to jenny.walton@electricitycommission.govt.nz.

Update 1 - 4 May 2007


The Commission wanted to review these prices and so invoked rule 3.28 of section V of part G of the Electricity Governance Rules and ordered the delay to the publication of final prices and final reserve prices for trading period 37 on 29 April 2007. 

Final prices and final reserve prices for all trading periods of 29 April except trading period 37 were published on 30 April 2007.  At the same time the prices for trading period 37 were published as provisional prices to give participants an indication of the calculated prices for that period.   At the request of the Commission the pricing manager has provided a report on the inputs and process used in calculating these prices. 
The pricing manager was satisfied that final prices for 29 April 2007 as calculated on 30 April 2007 are correct to the extent that:

a.    the pricing process was performed correctly;
b.    there are no infeasibilities in the final pricing solve; and
c.    to the best of its knowledge, the inputs provided under the Rules by other parties which are required to perform the pricing process in accordance with the Rules, were present and correct.

The pricing manager concluded that the prices were the result of a spring washer effect caused by the combination of demand, a bipole outage on the HVDC and a binding group constraint.

The system operator has also confirmed that to the best of its knowledge the model configuration, constraints, dispatch and outages relevant to trading period 37 are correct.

The Commission is aware that a prolonged delay in the publication of final prices could affect participants and impact on the settlement process.  However, the Commission notes the unprecedented nature of the calculated prices and for this reason has extended the delay period to consider the issue further.

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Last update on 01 June 2007 06:19 PM