About market operation service providers
The Registry is a national database that contains information on every point of connection on a network from which electricity is supplied to a site. These points of connection are referred to as installation control points (ICPs), each of which has a unique identifier. Currently the Registry holds information on around 2 million points of connection, and over the last 12 months has supported some 314,000 consumer ICP switches between retailers.
Information on every point of connection to electricity networks is needed to support the customer switching and reconciliation processes.
Part 11 of the Code provides for the management of information held by the Registry and outlines the process for switching customers between retailers.
Jade Direct New Zealand Limited is contracted as Registry Manager.
Electricity is transmitted over the national grid on a continuous basis, but the sources of demand and generation change many times over the course of a day.
Ensuring that participants (generation companies or bulk purchasers) are allocated their correct share of electricity generation or consumption is a key role in operating an efficient market. This function is facilitated by the Reconciliation Manager, who receives and processes large quantities of metering data on a monthly basis, reconciles it against a register of contracts, and passes the data to participants.
The process involves a considerable amount of detailed analysis to process and correct data for inaccuracies. Information from the reconciliation process is used for the electricity market settlement function carried out by the Clearing Manager.
The reconciliation processes and obligations on the various parties involved in the process are set out in Part 15 of the Code.
NZX is contracted as Reconciliation Manager.
In the wholesale electricity market, changes in demand and supply over the course of a day result in different prices for electricity during each half-hour trading period. Prices also vary by location, reflecting the costs (electrical losses and transmission constraints) of getting electricity from source (generator) to destination (consumers).
The Pricing Manager is the market operation service provider responsible for calculating and publishing the spot prices at which electricity market transactions are settled. Prices are derived using sophisticated models which calculate nodal prices for each trading period based on generator offer prices and quantities, demand, and system conditions. This information is provided to the Clearing Manager to use in the clearing and settlement processes. The Pricing Manager calculates approximately 14,000 prices every day which are published to market participants through the wholesale information and trading system (WITS).
The processes followed by the Pricing Manager in establishing prices are set out in 13 of the Code.
NZX is contracted as Pricing Manager.
The Clearing Manager is the service provider responsible for ensuring that market participants pay or are paid the correct amount for the electricity they generated or consumed during the previous month.
This involves a number of tasks, the most obvious one being invoicing participants for the sale and purchase of electricity and related services. On a monthly basis, the Clearing Manager does this by combining reconciled quantity information provided by the Reconciliation Manager with half-hourly pricing information from the Pricing Manager to determine the amounts owed to and by each market participant. Annually, the Clearing Manager acts as the counterparty for over $6 billion worth of electricity transactions.
An equally important role of the Clearing Manager is ensuring that participants will be able to pay invoices for electricity they have consumed. This role is particularly important in an electricity market because unlike other products, electricity has already been consumed at the point it is invoiced, and can't be repossessed. If a purchaser fails to pay, then generators cannot be paid which may result in considerable cash flow issues. The Clearing Manager provides confidence in the market by continuously monitoring prudential security requirements. It also manages any disputes or payment defaults.
Clearing and Settlement processes and requirements are set out in Part 14 of the Code.
NZX is contracted as Clearing Manager.
WITS is the electricity market wholesale information and trading system used by electricity market participants to upload their bids (purchasers of electricity) and offers (generators). WITS also delivers pricing, scheduling and other market data to participants.
WITS processes and requirements are set out in Part 13 of the Code.
NZX is contracted as the Wholesale Information and Trading System Manager.
The System Operator is the market operation service provider responsible for co-ordinating supply of and demand for electricity in real-time, in a manner that avoids fluctuations in frequency or disruption of supply.
This requires maintaining a continuous (second-by-second) balance between electricity supply from power stations and demand from consumers. The System Operator achieves this by determining the optimal combination of generating stations and reserve providers for each half-hour trading period, instructing generators when and how much electricity to generate, and managing any contingent events that cause the supply-demand balance to be disrupted. System Operations staff in Transpower's control rooms undertake this work using sophisticated modelling and communications technologies.
In addition to its real-time dispatch and security management role, the System Operator also carries out investigations and planning to ensure that supply can meet demand and system security can be maintained during future trading periods. Examples of this are co-ordinating generator and transmission outages, facilitating commissioning of new generating plant and procuring ancillary services to support power system operation.
Transpower, the state-owned enterprise that owns the high voltage transmission grid, is contracted as the System Operator.
System Operator processes and functions are set out in Part 7 of the Code.
The Market Administrator provides a number of operational and administrative services to the market under the wholesale and retail Parts of the Code.
The Authority is currently the Market Administrator.
Under the Code, the FTR Manager creates inter-island financial transmission rights (FTRs), allocates FTRs to industry participants via regular auctions, and undertakes other activities associated with operating, promoting and developing the FTR market over time.
The FTR Manager is required to develop, consult with industry on, and submit for Authority approval a draft FTR allocation plan, which contains the FTR auction rules, and the design of FTRs and the FTR grid, and to regularly update the plan following the same process to further develop the FTR market over time. The FTR manager is the first point of contact with FTR participants and registers parties who wish to participate in FTR auctions. Prior and during each auction the FTR Manager checks with the clearing manager that the amount of security each party holds is sufficient to validate their bids. The FTR Manager manages the FTR register, in which all FTR holdings will be publicly listed.
The FTR manager also calculates the proportion of the loss and constraint excess that can be allocated to settling inter-island FTRs and informs the clearing manager, who uses that money and the auction proceeds to settle payments to FTR holders each month.
The FTR market is currently in establishment phase. Energy Market Services (EMS), a division of Transpower, has been contracted to be the FTR Manager and is expected to hold the first FTR auction in early May 2013.