Glossary
A
Active Power
Active power, measured in watts (W), is the product of the voltage and the component of current power in phase with the voltage.
Ancillary service
The system operator contracts individual participants to provide five services essential to maintaining the common quality of electricity supply, these ancillary services are black start, over frequency reserve, frequency keeping reserve, instantaneous reserve and voltage support.
Appropriation
Money voted by Parliament to fund the operations of a Government department or agency.
Asset
Equipment or plant that is part of or is connected to the grid.
Asset capability statement
A statement provided to the system operator that outlines the capability and operational limitations of assets during both normal and abnormal conditions on the grid.
Asset owner
A participant who owns or operates assets used for generating or conveying electricity.
B
Benmore
Benmore power station injects electricity at the southern end of the HVDC, and half-hourly prices at the Benmore node generally reflect the half-hourly prices across the South Island. Benmore is one of the three key reference nodes, along with Haywards and Otahuhu.
Black start
Some generators have the ability to black start, meaning they can restart their generation plant with no electrical input if the system has blacked out. Generators without this capability require power from the grid to restart their generating plant.
Block dispatch
Block dispatch allows generators to receive dispatch instructions for a group of stations to be dispatched as a block. This allows them to decide how to implement the instruction within the block to manage their hydro resources efficiently.
Board
The Board of the Electricity Authority comprises an executive chair, and four to six members, who have been recommended for appointment by the Minister of Energy and Resources to oversee the governance, operation and development of New Zealand’s electricity market.
C
Carbon charge
A low-level Government tax aimed at reducing greenhouse gas emissions to meet New Zealand’s international climate-change obligations.
Clearing House and Settlement Manager (CHASM)
The clearing and settlement system used by the clearing manager.
Clearing manager
The market operation service provider (currently the New Zealand Stock Exchange) responsible for monitoring prudential security requirements and invoicing and settling electricity and ancillary service payments.
Code of practice
The codes of practice are those parts of the Code which cover the accuracy of metering installations, requirements for approved test houses, requirements of metering installations, data-logger requirements, requirements for data administrators and profile administration.
COMIT
The internet-based system that provides pricing and trading information for the New Zealand electricity market. COMIT is available by subscription from the provider, the New Zealand Sock Exchange (NZX).
COMIT free to air
The internet site that provides a snapshot of the information contained on COMIT, including prices, demand and hydrology. Freely accessible at electricityinfo.co.nz.
Connection contract
The contract between participants and the grid owner, to connect to the grid at a point of connection.
Constrained on compensation
An amount paid to generators, if they are required by the system operator to generate during a trading period when the final price is less than the generator’s offer price. The payment is calculated by the clearing manager and is payable by purchasers and the system operator.
Constraint
A constraint occurs when a transmission line (or lines) reaches its maximum carrying capacity. When this occurs, the regions on either side of the constraint are considered ‘islands’ in price terms. One ‘island’ cannot supply any more electricity to the other, meaning demand has to be met by local generation plant.
Consumption
The electrical energy consumed by a 1,000 watt (1 kilowatt) appliance in an hour is one kilowatt-hour (kWh). A kilowatt-hour is also known as a ‘unit of electricity’ and is the unit in which retail sales of electricity are measured.
Customer
A person who has agreed to purchase electricity from a retailer at a specific installation control point (ICP) e.g. a domestic consumer.
Customer switching
Since the introduction of retail competition to the New Zealand electricity market, customers have been able to choose their electricity supplier. Statistics are available on the number of customers who switch supplier are published each month.
D
Data administrator
Data administrators gather all metering information, prepare estimates for half-hour metering data, and aggregate metering data for reconciliation.
Default
Failure of a purchaser to pay for electricity purchased in cleared funds by 16:00 hours on the 20th day of the calendar month following the billing period. In the event of a default the money that is unpaid is pro-rated among generators.
Demand-side initiative
An initiative that encourages or facilitates electricity consumers to modify their usage in a way that reduces consumption in a specific time period or shifts consumption from one time period to another.
Demand-side participants
Purchasers of electricity.
Direct consumer
A consumer that purchases electricity from the wholesale (‘spot’) market for its own consumption, or a consumer with a grid connection e.g. a large industrial user.
Dispatch instruction
An instruction issued by the system operator to generators and ancillary service agents in accordance with the dispatch schedule.
Dispatch objective
The system operator has the objective of ensuring that generation meets demand at least cost to purchasers.
Dispatch prices
Dispatch prices are forecast prices calculated in the four hours before dispatch takes place. Dispatch prices are produced in the schedule of dispatch prices and quantities (SDPQ) and are more accurate than prices from the pre dispatch schedule (PDS).
Dispatch schedule
The schedule which the system operator bases dispatch instructions on to achieve the dispatch objective.
Distributor
A company that owns or operates the power lines that transport electricity on local low voltage networks.
Domestic consumer
Users of electricity for personal, domestic or household use. This does not include users who purchase electricity for re-supply, or for use in production or manufacture.
E
Electricity Industry Act 2010
The Act that regulates the New Zealand electricity industry, and under which the Authority operates.
Electricity and Gas Complaints Commission
The Electricity Gas and Complaints Commission is a separate organisation from the Electricity Commission. It provides consumers with a free and independent dispute resolution service for complaints about their electricity lines or retail company. See egcomplaints.co.nz.
Electricity Authority
The independent Crown entity established under the Electricity Industry Act 2010, to oversee the governance, operation and development of the New Zealand electricity market.
Electricity Networks Association (ENA)
The organisation that represents the interests of the electricity lines companies (also referred to as distributors).
Embedded generation
Generation that is connected to a local network rather than to the national grid.
F
Fast instantaneous reserve (FIR)
A type of instantaneous reserve that is available within six seconds of an unexpected generator or transmission outage. Instantaneous reserve is procured based on the size of the single largest contingent event that could occur during a particular trading period. Generators offer instantaneous reserves at the same time as they make energy offers.
Financial transmission rights (FTRs)
A financial risk management product that protects against price risks arising from transmission losses and constraints.
Forecast price
Forecast prices are calculated from the pre dispatch schedule (PDS) up to 35 hours ahead of the start of any half-hour period and every two hours from then until the start of the specific trading period.
Frequency
The frequency of the New Zealand grid is normally maintained at 50 Hertz frequency and is the number of cycles per second.
Frequency keeping Reserve or Frequency Regulating Reserve (FRR)
An ancillary service that keeps the frequency of the grid within its normal band. The frequency keeping station increases or decreases generation within a set band to ensure that supply equals demand on a second by second basis.
G
Generator
A company that generates electricity supplied on the grid or a local network.
Gigawatt hours (GWh)
One gigawatt hour is equal to one million kilowatt hours. New Zealand’s annual demand is approximately 38,000 GWh.
Grid
The high-voltage electricity network, provided by state-owned enterprise Transpower, which transmits electricity over more than 12,000km of transmission lines, throughout New Zealand from generators to distributors and major industrial users.
Grid emergency
A grid emergency occurs when the system operator’s ability to meet its principal performance objective (PPO) obligations is at risk, equipment or people are at risk, or the system operator has to take urgent action to restore the PPOs.
Grid exit point (GXP)
A point of connection where electricity flows out of the national grid to local networks or direct consumers.
Grid Injection Point (GIP)
A point of connection where electricity flows into the national grid from generating stations.
Grid owner
The state-owned enterprise Transpower, the owner of the high voltage transmission grid, also referred to as the national grid.
Grid upgrade plan (GUP)
Plan to upgrade the high-voltage transmission network, or national grid that transmits electricity throughout the country.
H
Haywards
The location on the national grid at which the HVDC is connected to the North Island. Prices at the Haywards node, located in the Hutt Valley, give a good indication of prices across the lower half of the North Island. Haywards is one of the three key reference nodes, the others being Benmore and Otahuhu.
Hedge contract
A financial risk management product or contract for sale and purchase of electricity that protects against price risks associated with the spot price of electricity. It sets a price at which a buyer will purchase a specific quantity of electricity at a specified node for a set period. The buyer pays this price regardless of whether the market price is higher or lower that the set price. They are also known as contracts for differences (CFDs).
Hedge market
A market through which hedge contracts are bought and sold.
High Voltage Direct Current HVDC
The high voltage transmission cable that transports electricity in both directions between the North and South Islands.
I
ICP (Installation Control Point)
A unique identifier for a point of electricity connection, which is used for reconciliation purposes.
Independent retailer
Any retailer trading on a particular local network grid exit point (except an incumbent retailer).
Infeasibility
An infeasibility occurs when the scheduling pricing and dispatch (SPD) model cannot produce a solution that is physically feasible. When this occurs, the SPD model flags the infeasible solution and the system operator reconfigures the input information.
Information system
The software system required by the rules to transfer information between participants, especially the uploading of bids and offers.
Installation Control Point (ICP)
A point of connection on a local network or an embedded network which the distributor nominates as the point at which a retailer will be deemed to supply electricity to a consumer.
Instantaneous reserves
Generation capacity that is made available to be used in the event of a sudden failure of a generating or transmission facility in order to maintain system frequency at 50 Hz. Fast instantaneous reserve is available within six seconds and must be able to operate for one minute. Sustained instantaneous reserve is available within 60 seconds and must be available for 15 minutes.
Intermittent generation
Generation for which the source is intermittent and not easily predicted e.g. wind or wave generation.
Interruptible load
A type of instantaneous reserve that is provided by load that can be quickly disconnected, e.g. hot water heating.
J
Jade
Jade is the service provider contracted by the Authority to manage the registry database. The registry database shows which retailer supplies each ICP, so that electricity consumption can be reconciled between retailers. The registry also informs a retailer if one of its consumers has switched supplier.
K
Kilowatt-hour (kWh)
A kilowatt-hour is also known as a unit of electricity and is the basis of retail sales of electricity.
L
Levy
The charge on the electricity industry that funds the Authority.
Lines company
A company that owns the lines which transport electricity on local low-voltage networks (also called distribution companies or distributors).
Local network
The lines and substations used by distributors to transport electricity from grid exit points (GXPs) to points of connection with consumers.
Losses
As electricity travels through the national grid, a proportion of energy is lost as heat due to the resistance in the lines. The greater the distance the electricity travels and the lower the voltage of the line, the higher the losses are.
M
Major Electricity Users' Group (MEUG)
The industry lobby group representing major electricity users.
Market administrator
The market operation service provider responsible for operational and administrative services to the wholesale and retail markets. This function is currently undertaken by the Electricity Authority.
Market operation service provider
There are seven market operation service providers engaged in the operation of the electricity market. The Authority performs the role of market administrator and contracts other parties to provide the remaining six services:
- system operator
- reconciliation manager
- information system provider
- clearing manager
- pricing manager
- registry.
Megawatt hour (MWh)
One megawatt hour is equal to 1,000 kilowatt hours. Megawatt hours are the metering standard unit for the wholesale market.
Meter
Equipment that measures electricity quantity in kilowatt hours.
Metering and Reconciliation Information Agreement (MARIA)
The agreement that, until 1 March 2004, governed all aspects of the metering and reconciliation process under bi-lateral trading arrangements.
Multilateral Agreement for Common Quality Standards (MACQS)
The agreement that, until 1 March 2004, governed all aspects of the metering and reconciliation process under bi-lateral trading arrangements.
Must-run dispatch auction
The must-run dispatch auction allows a generator to bid for the right to offer generation at zero price to ensure it is dispatched. The auction typically runs during periods of low demand (e.g. Christmas day) when generators need to run their plant to fulfill contractual obligations, comply with legal obligations or for cost reasons.
N
National grid
The transmission network owned by state-owned enterprise, Transpower, that transports high-voltage electricity from the major power stations to the local distribution networks operated by lines companies.
Network
The national grid, a local network or an embedded network.
NZEM (New Zealand Electricity Market)
The multi-party trading arrangement under which, until 1st March 2004, the majority of New Zealand’s wholesale electricity was bought and sold.
O
Offer
An offer to sell a quantity of electricity at a specified price.
Offer stack
The stack generated by ranking, in price order, all the offers to sell electricity.
One-in-60 dry year
A year in which there is a hydro drought of the severity that can be expected to occur every 60 years. The duration and timing of such an event will determine whether it has implications for security of supply.
Otahuhu
Prices at the Otahuhu node are used as an indicator of prices in the upper North Island. Otahuhu is one of the three key reference nodes, the others being Haywards and Benmore.
Over frequency reserve
An ancillary service that automatically reduces the level of injection from a generating set to stop an unplanned rise in the frequency.
P
Payee
Generators, ancillary service agents, and the system operator in relation to payment for ancillary-service administrative costs.
Payer
Any participants who purchase electricity from the clearing manager or who pay for ancillary services.
PDS (Pre Dispatch Schedule)
This schedule is produced by the system operator, and includes expected levels of generation, instantaneous reserves, demand and forecast energy and reserve prices. If produced before 13:00 hours, the PDS covers the remaining trading periods of the day. If produced after 13:00 hours, it covers the remaining trading periods of the day and the trading periods of the following day.
Price
The New Zealand electricity market uses four types of prices – forecast, dispatch, final and real-time prices.
Pricing manager
The market operation service provider (currently the New Zealand Stock Exchange) contracted by the Authority to calculate and publish final prices.
Profiling/profiles
Profiling allows retailers to estimate how much electricity any consumer will use in each half hour by providing a typical consumption 'shape'.
Prudential security
Electricity can be consumed up to 50 days before payment for it is due. As a result, each purchaser is required to provide ‘prudential security’, most commonly in the form of cash or a letter of credit, to cover the risk of not paying for this electricity on the due date. This ensures that generators are paid, even if a purchaser defaults. To ensure that sufficient security is held, the clearing manager monitors current and projected exposure on a weekly basis using bids, cleared offers and final prices.
Purchaser
A company that buys electricity from the wholesale (‘spot’) market.
R
Reactive power
Reactive power is the product of the voltage, current and the sine of the phase angle, and is measured in kiloVolt-Amps reactive (kVAr).
Real time (‘five-minute’) price
The price of wholesale electricity calculated for every five-minute period through each day.
Reconciliation
The process of matching the electricity supplied to customers by individual retailers with actual demand at a grid exit point.
Reconciliation Manager
The market operation service provider (currently the New Zealand Stock Exchange) contracted by the Authority to undertake the monthly reconciliation process and take responsibility for reconciling metering data against a register of contracts and passing the data to participants.
Reference nodes
The three reference nodes are Benmore, Haywards and Otahuhu. Prices vary throughout the country so the prices at these nodes are considered indicative of electricity prices for the South Island, the lower North Island and the upper North Island respectively.
Registry
The database that identifies every point of electricity connection using an installation control point (ICP) reference, enabling energy flows between retailers to be reconciled. The registry also informs retailers when a customer switches supplier.
Reserve
Spare generating capacity or load reductions used to recover frequency immediately following a sudden generation or transmission line outage.
Retailer
A company that sells electricity to customers.
S
Scheduling, pricing and dispatch (SPD)
The scheduling, pricing and dispatch software used by the system operator and the pricing manager.
Settlement
Settlement occurs on the 20th day of the month after trading occurred. The clearing manager operates a clearing house, paying generators in full once all monies are received in cleared funds from purchasers.
Spot market
The buying and selling of wholesale electricity is done via a ‘pool’, where electricity generators offer electricity to the market and retailers bid to buy the electricity. This market is called the spot or physical wholesale market.
Spot price
The half-hour price of wholesale (‘spot’) market electricity published by the pricing manager.
Statement of Intent (SOI)
The guiding document for a public sector body outlining its objectives, performance targets, and means of delivery against Government policy.
Statement of Opportunities (SOO)
The Electricity Commission published statements of opportunities (SOO) to enable the identification of potential opportunities for efficient management of the grid, including investment in upgrades and in transmission alternatives. The most recent edition of the SOO was published in 2010.
Station dispatch
Station dispatch allows generators to receive dispatch instructions for an entire station rather than by unit, enabling them to manage unit loadings individually to achieve more efficient operation of the plant.
Supervisory Control and Data Acquisition (SCADA)
The systems used by the system operator to collect and display information on how the system is operating on a moment-by-moment basis.
System Operator
The System Operator (currently Transpower) is the market operation service provider responsible for scheduling and dispatching electricity, in a manner that avoids fluctuations in frequency or disruption of supply.
T
The Electricity Networks Association
The organisation that represents the interests of the electricity lines companies.
Transpower
The state-owned enterprise which owns the high-voltage transmission network (the national grid) and acts as system operator.
Two-hour rule
The two-hour rule means that, without good reason, a generator or purchaser cannot alter a bid or offer within two hours of the electricity being dispatched.
U
Undesirable Trading Situation (UTS)
An undesirable trading situation (UTS) arises when there is a threat to orderly trading or settlement that cannot be resolved under the Code. The Commission is able to investigate any potential UTS and can take any action it considers appropriate, including suspending rule requirements and imposing new requirements on participants.
Use of system agreements
Agreements that cover retailers’ arrangements with distribution companies for local electricity distribution services.
V
Voltage support
The ancillary service that injects reactive power into the system to boost voltage at the point of injection.
W
Wash up
The monthly procedure that revises an invoice where the information it was calculated on has been amended.
