22 February 2016 - New System Operator Service Provider contract signed
The Electricity Authority and Transpower have successfully completed negotiations for an updated electricity system operator service provider contract. The contract, worth $216 million over the next five years, will come into effect on 1 July 2016.
Transpower, as the system operator, is responsible for managing the real time operation of the New Zealand electricity system.
The new contract includes increased transparency over service and performance, greater commercial discipline on costs and project management, and requirements for more engagement with stakeholders.
The system operator’s focus has been aligned with the Electricity Authority’s objective to promote competition, reliability and efficiency for the long-term benefit of consumers.
Carl Hansen, Chief Executive of the Electricity Authority says, “The Authority and Transpower are united in their desire for an electricity sector that delivers long-term benefits for New Zealanders. The new contract firmly focuses the system operator’s work so that it best supports this objective.”
“The negotiating teams have worked constructively over a long period, and I commend the professional and commercially-focused approach that has been taken.”
Transpower Chief Executive Alison Andrew said that completion of a new system operator service provider contract was an important milestone for both organisations.
“A transparent, commercial contract for our system operator service will enable us to continue to deliver an efficient wholesale electricity market, and effectively run the real-time operation of the grid,” she said.
Mr Hansen says, “A major focus of the new contract was on ensuring value for money. The overall outcome is an extremely positive one both for the industry and electricity consumers.”
Key changes in the new system operator service provider contract include:
- A fixed fee for the majority of services has been agreed. Any increases above the fixed fee (other than as a result of indexation) now require industry consultation. An efficiency incentive has been put in place.
- Any capital expenditure to improve or enhance the services must be consulted on and approved by the Electricity Authority.
- Performance and delivery incentives will be agreed annually; and
- New reporting requirements such as performance-related audits, final business cases for capital projects will enable clearer demonstration that the services are being delivered effectively. high value capital projects will be subject to a benefit realisation review following completion.
For more information:
021 321 831
Corporate Communications Manager
021 578 608