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Transmission Pricing Review

The Electricity Authority's transmission pricing (TPM) review is a wide-ranging review of options for the allocation methodology for transmission costs.

Details of the existing TPM can be found on the page below:

• Transmission Pricing Methodology 

Details of the development of the TPM are available on the page below:

• Development of the Transmission Pricing Methodology 

Introduction

The Electricity Authority (Authority) is responsible under section 16 of the Electricity Industry Act 2010 for making and administering the Electricity Industry Participation Code 2010 (Code) which includes, as a schedule, the Transmission Pricing Methodology (TPM).

The Authority decided to continue the TPM Review started by the Electricity Commission, and set up the Transmission Pricing Advisory Group (TPAG) in early 2011 to work through the issues and make recommendations to the Authority. TPAG was unable to reach a consensus on key aspects of transmission pricing and, although it undertook valuable analysis, there remain substantive issues that require further consideration and consultation.

The Authority published a decision-making and economic framework consultation paper in January 2012. The Authority received submissions, invited and received cross-submissions and held meetings with interested parties during February and March 2012. A schedule of meetings and attendees is available below.

Next steps

As the Authority has published an Issues Paper, the review process will follow the steps set out in Part 12, subpart 4 of the Code for developing any new TPM. These steps involve the development of guidelines and process for Transpower to follow in developing a new TPM, the development of a new TPM and the application of a new TPM. The time taken from publication of an Issues Paper to the Code amendment to confirm a new TPM will take at least one year and depends on the complexity of the proposed new TPM. Subsequent rounds of consultation may be required should submitters identify material problems with the TPM proposal, or demonstrate that there is an alternative approach that would deliver greater efficiency gains.

Transpower's annual pricing round begins around August of the year prior to the pricing year. The Authority does not expect that any changes to the TPM would be effective by 1 April 2015..

Assistance with TPM

The Authority engaged Sapere Research Group (Sapere) in 2011 for a fixed term contract to assist the Market Design team (Retail and Network Markets) with Code development and administration, including in relation to Part 12 of the Code.

The contract is non-exclusive and the Authority and Sapere have agreed arrangements for managing any conflicts or potential conflicts arising from past or concurrent work by Sapere for other parties. In particular, the Authority and Sapere have agreed that Sapere staff undertaking work for the Electricity Networks Association (ENA) will be excluded from the work undertaken for the Authority, and will not have access to files relating to that work, because of the potential for ENA work to overlap with the work that the Authority may ask for from Sapere.

Staff from Sapere are assisting the Authority with aspects of the transmission pricing methodology (TPM) review. The Authority understands that the Sapere staff working for the ENA may assist the ENA with its submission on the TPM review issues and proposal consultation paper. In addition to the existing arrangements for managing conflicts, the Authority will ensure that the ENA submission on the TPM review will be considered by the Authority without any comment or input from the Sapere staff assisting the Authority.

Overview of the TPM Review to date

This page is related to: Transmission, Market Development Programme.

Back to top Last updated on 8 April 2013