Our plan for 1 July 2016–30 June 2017 Statement of Performance Expectations

An Introduction from our Chair




Our Statement of Performance Expectations (SPE) outlines our plan for the 2016/17 financial year. It includes information about our key projects and business as usual functions, as well as our forecast financial statements.

The SPE is a partner document to our Statement of Intent 2014–2018 (SOI) published in June 2014. The SOI sets out our long-term strategic intentions for a four-year period while the SPE details our planned work and financial forecasts for one year.

This SPE has been informed by the submissions we received on our 2016/17 appropriations and work programme consultation. It outlines how we plan to use each of our appropriations and what we are aiming to achieve.

We also publish on our website a more detailed work programme, setting out our projects and their key deliverables for the 2016/17 year.

Our journey so far

We were established in November 2010. Our initial focus was on completing and implementing the changes required by section 42 of the Electricity Industry Act 2010 (the Act). This included a strong focus on improving reliability of supply and on initiatives to enhance retail market competition. A notable success was the creation of the What’s My Number campaign, which had an immediate and ongoing impact.

We then moved our focus to ways we could improve wholesale market competition, including through an enhanced hedge market. We continued work to enhance retail competition. This included projects to improve the transparency of electricity charges and to make it easier for consumers to confidently find the best deal in the market.

In 2015/16 we placed an increased focus on the efficiency limb of our statutory objective, including looking at the efficient operation of the electricity industry and the efficient pricing of transmission and distribution services.

Our strategic focus for 2016/17

In addition to completing our review of the guidelines for transmission pricing in 2016/17, we are also looking at two broad areas that could have a significant impact over the medium term: the implications of new technology and potential security of supply issues.

In regard to new technology, the electricity industry faces potentially far-reaching changes in the near future from evolving technology. These technologies could create a wide range of options for how electricity is generated and used, giving consumers far greater choice and individual control than ever before. It could also have significant implications for market participants, with the potential for new and disruptive players to enter and grow market share.

The uptake of these technologies is expected to result in significant change for the electricity industry and require changes to the Electricity Industry Participation Code 2010 (Code) and our market systems. The Authority aims to:

  • ensure there are no inefficient barriers to the adoption of new technologies, whether by existing market participants, new entrants or consumers
  • ensure, as far as practicable, that decision makers face efficient prices for inputs and outputs regarding new technologies.

Security of supply issues arose in the second half of 2015 when Contact Energy and Mighty River Power announced the closure of the Otahuhu B and Southdown thermal generation plants. At the same time, Genesis Energy was considering the future of its remaining coal-fired plants at Huntly. It has now announced these units will be retained until at least December 2022.

The electricity market is facing unprecedented uncertainty about future levels of demand for electricity due to the world prices received by some of New Zealand’s largest industrial consumers but also due to potential uptake of new generation, such as solar panels and battery storage technology. The Authority has been pursuing the introduction of standardised cap products in the electricity futures market to further promote the efficient provision of backup generation plant (and demand response capability) suitable for covering dry-year risks. To that end, the Australian Securities Exchange (ASX) announced recently that it intends to list such a product on its New Zealand trading platform by the end of 2016.

In light of the uncertainties about future demand and supply the Authority has decided it would be prudent to review the customer compensation and stress testing regimes to ensure they are consistent with delivering ongoing security of supply. We will also continue our active monitoring of all market developments and we are advancing several other projects that will promote an efficient level of security of supply.

Ultimately, the focus of all our work is always on promoting long-term benefits for consumers.



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Dr. Brent Layton

Statement of Responsibility

The Crown Entities Act 2004 requires the Electricity Authority to prepare a Statement of Performance Expectations, including prospective financial and non-financial information, before the start of each year, to promote our accountability to the public. The prospective financial and non-financial information may not be appropriate for any other purpose and is unaudited.

We acknowledge responsibility for the preparation of the prospective financial and non-financial performance statements included in this Statement of Performance Expectations for 1 July 2016–30 June 2017. This includes the appropriateness of the assumptions underlying the prospective financial statements and all other required disclosures, pursuant to the Crown Entities Act 2004.

We acknowledge the responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the Authority’s performance and financial reporting.

In our opinion, the prospective statements fairly reflect the forecast financial position of the Authority at 30 June 2017, and results of our financial and service performance for the period ending on that date. We therefore authorise the issue of the prospective statements.

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Dr Brent Layton                                        Hon Roger Sowry

Chair                                                        Member

9 June 2016                                             9 June 2016


This Statement of Performance Expectations (SPE) is a partner document to the Statement of Intent 2014–2018 (SOI) published in June 2014.

The SOI sets out our long-term strategic intentions for a four-year period. It is published at least each three years.

The SPE details our planned work and financial forecasts for one year.

SPE diagram

Our Strategies

Our strategic intentions and strategic framework are outlined in detail in our Statement of Intent 2014–2018, and are summarised in Figure 1.

Figure 1: Our Strategic Framework