2012 enquiries, reviews and investigations
Increased South Island reserve offer prices May 2012
|Stage: II (Review)||Status: Complete||Date commenced: 10/05/2012|
During May 2012, south flow on the HVDC link was at times constrained due to high reserve prices. This review established that high reserve prices were facilitated by Meridian Energy Ltd (Meridian) purchasing the right to offer interruptible load associated with the Tiwai Point aluminium smelter into the South Island market, at a price determined by Meridian. The review considered the effect on competition of this particular instance of the transfer of offer rights under a contractuall arrangement. The review concludes that the transfer of offer rights can lead to a reduction in competition, and that it may be desirable to consider amendments to the Code to restrict this type of activity. The review also concluded that security of supply was not impacted, as net levels of hydro storage in the South Island were maintained.
The Authority sought comment from Meridian and Genesis Energy Ltd on the draft review.
The Authority has replied to Genesis in respect of their comments on the review into local net pivotal generation as well as this review, as a number of issues raised by Genesis applied to both reviews.
The Authority has also responded to Meridian Energy.
Reduced energy offers at Arapuni on 13, 14 and 16 April 2012
|Stage: I (Enquiry)||Status: Complete||Date commenced: 18/04/2012|
The system operator issued Grid Emergency notices on 13 and 16 April 2012 relating to low generation offers from Arapuni power station and consequently implemented a network reconfiguration at the Arapuni bus. The Authority is looking into the reasons for reduced energy offers at Arapuni power station during the affected trading periods on 13, 14 and 16 April 2012.
The Authority's enquiry indicated the technical reasons for the reduced quantity of generation offers from Arapuni power station on 13, 14 and 16 April 2012, required additional units at Arapuni to be placed on outage for several trading periods. The changes to energy offers at Arapuni reflecting its unavailability were made well in advance of the affected trading periods.
Locally net pivotal generation
|Stage: II (Review)||Status: Complete
||Date completed: 30/07/2012|
This review started as an enquiry into the net pivotal status of Genesis Power Ltd at Tekapo A. when Tekapo A and Albury are islanded from the grid during line maintenance. A generator that is locally net pivotal has the ability and incentive to set high local prices, in this case at about $3000/MWh. The Authority has since noticed a similar occurrence in respect of the Cobb generation owned by TrustPower Ltd, when it became part of a sub-network islanded from the rest of the grid during a transformer outage.
The review considered the circumstances surrounding these recent events, and the possibility for other similar events to occur in the future. The review has identified a recent change in behaviour, and the potential for about 0.2% of traded energy to be affected by locally net pivotal generation. The review considers at a high level a number of potential remedies under the Code that might lead to more competitive outcomes, and efficient pricing in the spot market, in situations where a local generator is net-pivotal. The wholesale advisory group has added this item to their work program and will be progressing further analysis.
Comment was requested from Trustpower, the System Operator, and Genesis Power Ltd. The Authority is still considering a number of the issues raised by Genesis and the System Operator.
Analysis of Transpower reports relating to 13 December 2011 event
|Stage: I (Enquiry)||Status: On-going||Date commenced:|
The Authority is analysing technical information provided by Transpower relating to events of 13 December 2011.
Frequency keeping costs for trading period 31 on 13 December 2011
|Stage: I (Enquiry)||Status: Complete||Date commenced: 01/03/2012|
Two frequency keepers were cleared for trading period 31 on 13 December 2011. The first frequency keeper covered the beginning of the trading period (15:00) and was replaced by the second frequency keeper at 15:15, due to a security reason. Both Frequency Keepers were paid a full frequency keeping fee. The Authority investigated why full payments were made. The system operator has explained that contractual terms for providing the service require full payment unless the frequency keeper was dispatched off within 3 minutes of the start of the period, or it was dispatched on less than 3 minutes before the end of the period.
Impact of reduced HVDC south constraint on South Island reserves
|Stage: I (Enquiry)||Status: Complete||Date commenced: 24/01/2012|
The current low South Island hydro storage has increased reliance on North Island generation, increasing the amount of HVDC south flow.
During periods of high HVDC southward flow and low South Island load, the system operator has experienced issues with their market tools not converging to a secure dispatch solution. To address this, the system operator reduces the limit on HVDC south flow.
The Authority's analysis of such an event on 19 January 2012 indicates that the reduced limit can suppress the South Island reserve price when it is binding. The Authority identified three options to address the South Island reserve price suppression. Two of these were considered infeasible by the system operator. The third option, although providing some minor price restoration, was not considered as a viable alternative by the Authority as it introduced a number of market discontinuities. The Authority continues to monitor the situation.
Market impact assessment of Arapuni split
|Stage: II (Review)||Status: Complete||Date commenced: 10/01/2012|
Transpower has implemented a permanent bus split at Arapuni to relieve transmission constraints in the upper North Island region, and reduce the need to constrain back generation from Arapuni. Under the Electricity Industry Participation Code (Code), Transpower is required, and has demonstrated, a net benefit a from the permanent grid reconfiguration.
Genesis Energy raised concerns around the regular opportunities this reconfiguration affords Mighty River Power to exercise market power, primarily at the Kinleith grid exit points, and that these market impacts should be included within the net benefit assessment
This report details the review conducted by the Authority and considers the potential impacts of the Arapuni bus split on the wholesale electricity market. Potential amendments to the Code to include market impacts and potentially reduce time delays in some grid reconfiguration approvals are also considered.