Frequency keeper selection change
In response to a request from an industry participant, the Authority has investigated a rise in constraint payments associated with the North Island frequency keeping service. The percentage of total North Island frequency keeping costs attributable to constraint payments has trended upwards since February 2011 and rose sharply in August and September 2011.
The current frequency keeper selection methodology used by the system operator does not include an ex-ante estimate of constrained on payments earned by the frequency keeper within the band. The lowest overall cost provided is not always selected particularly at times when constrained-on payments make up a high percentage of the total cost, the cost of the selected provider may substantially exceed the least cost alternative.
As a result of investigations and feedback from service providers and other interested parties, a change to the selection methodology is to be implemented for both the North and South Island. From mid-November 2011, frequency keeper selection is to be based on:
- the availability fee; plus
- constrained on or off costs required to get the frequency keeper to the mid-point of its band; plus
- a worst-case estimate of constrained on payments in the band (i.e. that the frequency keeper is operated at the top of its band throughout the trading period).
Related Documents
Letter to service providers proposing changes
Proposed-Changes-to-FK-Selection-Methodology.pdf | pdf | 270 KB | Modified: 09/11/2011 4:20pm
System operator investigation report
System-Operator-Report.pdf | pdf | 253 KB | Modified: 09/11/2011 4:14pm
Letter to service providers confirming changes (including summary of feedback)
Confirmed-Changes-to-FK-Selection-Methodology--OLD.pdf | pdf | 276 KB | Modified: 09/11/2011 4:21pm