High Spring Washer Resolution Process - Permanent Code Amendment
About this consultation
On 22 December 2011, the Electricity Authority gazetted (No. 200, p. 5740) amendments to the Electricity Participation Code 2010 (Code) to restore the effectiveness of the high spring washer resolution process. The amendment came into effect on 23 December 2011 and, as the Code amendment was made under Section 40(1) of the Electricity Industry Act 2010, it expires after nine months on 22 September 2012.
The Authority is now proposing a further Code amendment in accordance with the Act and the Authority's Code Amendment Principles to address this matter.
Background
A spring washer occurs when the scheduling, pricing, and dispatch (SPD) model calculates escalating prices based on the marginal cost of supplying generation from different ends of an electrical loop around a binding transmission constraint. It is referred to as a spring washer because the prices decrease at one end of the constraint and increase (often above the price of the highest generation dispatched) at locations around the electrical loop and reach a peak at the other end. A comprehensive explanation of how these situations occur and the prices that result can be found on Transpower's website.
In 2006 the Authority's predecessor, the Electricity Commission, proposed that, when the final price schedules do include high spring washer prices, they be tested to ensure they were outside the range of any minor inaccuracies. It established a process that provided for the application of a relaxation factor to reduce the prices associated with a high spring washer price situation.
This resolution process worked for over four years until late March 2011, when Transpower introduced a software package to automatically calculate and apply security constraints in SPD. The application of this new software caused the resolution process to become ineffectual on high spring washer price situations around constraints on parallel circuits.
On 7 December 2011, the Authority considered recent cases and the potential for high spring washer price situations to occur around constraints on parallel circuits that could not be fixed by the resolution process then in place. The Authority considered that the potential for this situation to recur, with its attendant adverse effects on the Authority's ability to achieve its statutory objective, was significant enough to proceed with an urgent Code amendment to restore its effectiveness. This amendment came into effect on 23 December 2011.
Urgent Code amendments expire nine months after taking effect. After considering its options, the Authority is now proposing a further Code amendment in accordance with the normal (non-urgent) Code making provisions in the Act and consistent with the approach in the Authority's Code Amendment Principles.
Submissions
The Authority's preference is to receive submissions in electronic format (Microsoft Word). It is not necessary to send hard copies of submissions to the Authority, unless it is not possible to do so electronically.
Submissions in electronic form should be emailed to submissions@ea.govt.nz with Consultation Paper - High Spring Washer Resolution Process in the subject line.
If submitters do not wish to send their submission electronically, they should post one hard copy of their submission to the address below:
Submissions
Electricity Authority
PO Box 10041
Wellington 6143
or
Submissions
Electricity Authority
Level 7, ASB Bank Tower
2 Hunter Street
Wellington
Tel: 0-4-460 8860
Fax: 0-4-460 8879
Submissions should be received by 4pm on Thursday, 12 July 2012. Please note that late submissions are unlikely to be considered.
The Authority will acknowledge receipt of all submissions electronically. Please contact the Submissions' Administrator if you do not receive electronic acknowledgement of your submission within two business days.
Your submission is likely to be made available to the general public on the Authority's website. Submitters should indicate any documents attached, in support of the submission, in a covering letter and clearly indicate any information that is provided to the Authority on a confidential basis. However, all information provided to the Authority is subject to the Official Information Act 1982.
The table of questions from Appendix 1 of the consultation appears separately as a suggested template for your submission.
Consultation Papers
Amendment to high spring washer resolution methodology
Amendment-to-high-spring-washer-resolution-methodology.pdf | pdf | 222 KB | Last Changed: 14/06/2012 3:11pm