Exemptions to enable a multiple trading trial

A multiple trading relationship means the consumer has the option to have separate contracts with different retailers.

Multiple trading trial

The Electricity Authority approved two exemptions and a technical and non-controversial Code amendment to enable an energy sharing trial led by Kāinga Ora and Ara Ake.

In the trial Kāinga Ora will implement solar energy sharing on selected buildings to maximise their solar investment and show how energy sharing can potentially reduce energy hardship.

We see this trial as an opportunity to assess and learn more about this model of energy sharing using multiple trading relationships alongside industry. The lessons learned could be used to develop a more enduring energy solution for New Zealanders and promote competition further in the electricity market.

The trial is also an opportunity to identify any possible unintended consequences for consumers and the industry. This may be valuable if the Electricity Authority decides to consider future Code changes for multiple trading relationships.

What is a multiple trading relationship?

Currently customers contract with a single retailer for electricity services at one installation control point (ICP). A multiple trading relationship involves the consumer having the option to have separate contracts with different retailers; one for consumption of electricity, and another potentially with a different retailer who would buy electricity generated from the premises for export.

This multiple trading relationship trial aims to evaluate how consumers could benefit from having more choice in how and where electricity is being used and exported.

How will the trial work?

Kāinga Ora is both the trial lead and landlord to the selected Kāinga Ora homes that will participate in the trial. The trial will take place at 200 installation control points (ICPs) in the Wellington region over five years from 2023.

In the trial, the import and export channels of electricity will be separated at household ICPs. This will allow the excess solar generation to be sold back to a retailer and the revenues used to benefit other Kāinga Ora customers. The consumer will have a retailer of their choice for any additional electricity needed from the grid.

Ara Ake has supported Kāinga Ora to establish the case for considering multiple trading relationships in transitioning to a low-carbon system.

Wellington Electricity Lines Limited is the distributor, and Intellihub Limited is the metering equipment provider for the ICPs. Together with a consumption retailer and an export retailer, they will form the parts of the multiple trading relationships model.

The Code exemptions approved by the Electricity Authority allow Wellington Electricity and Intellihub to engage in the trial while still ensuring compliance with conditions that support a functioning market.

In considering the exemptions, we were careful to protect the consumers’ ability to have a choice in retailers providing electricity for consumption. The Code amendments allow the consumption retailer to operate as normal without confused responsibilities.

It is expected that Kāinga Ora will appoint an export retailer to participate in the trial. The retailer who accepts the export contract will need to obtain exemptions from certain clauses to preserve the integrity of the Code.

The Gazette notices require an exemption for the export retailer to be in place before the trial can start:

All exemptions are assessed on an individual case by case basis by our Compliance Committee, and sometimes our Board.

Clarification of responsibility for retailer obligations

The Electricity Authority decided to make technical and non-controversial amendments to two clauses in the Electricity Industry Participation Code 2010. The amendments clarify retailers’ obligations at an ICP and enable the multiple trading relationship trial led by Kāinga Ora and Ara Ake to proceed.

The amendments do not affect participants not involved in the multiple trading relationship trial – their obligations will remain the same.

You can learn more in our decision paper on the clarification of responsibility for retailer obligations.

Informing long-term solutions

There are several potential solutions to enable multiple trading relationships. Despite best efforts to prevent them, the model used for this energy sharing trial and enacted through these exemptions could have potential impacts for the market and other participants. If a permanent solution based on this trial proceeds, it might involve additional provisions and system changes. The Electricity Authority does not presently have an opinion on which, if any, solution is required.

Throughout the trial we will collect data to inform potential long-term Code amendments and we will monitor the impact of the trial on consumers and participants.

The model used in the trial can apply to all forms of electricity generation. Similar exemptions sought for multiple trading relationships will need to include detailed information on what additional benefits could be achieved, or new information provided, through other trials. Repeating trials that are too similar in nature is unlikely to provide additional benefits or highlight new innovative approaches.

The Electricity Authority has exemption conditions in place to monitor compliance, including regular reporting to the ICPs level. We do not intend to publish the reports.

If you have any questions on the progress of this trial, please contact Kāinga Ora, Wellington Electricity or Intellihub.