Schedule 14.4                                                     cl 14.8

Forms of hedge settlement agreement

Form 1: Fixed Price Fixed Volume

 

Date:  [Enter date]

 

Party A

 

Party B

 

1       Lodging of hedge settlement agreement

(1)     Party A and Party B (the parties) submit this hedge settlement agreement to the clearing manager, as contemplated by clause 14.8 of the Electricity Industry Participation Code 2010 (the Code).  Terms that are used in this agreement but not defined bear the meaning given to them in the Code.

(2)     By submitting this hedge settlement agreement to the clearing manager in accordance with clause 14.8 of the Code, the parties agree to be bound by the terms set out below from the time at which the clearing manager counter-signs it. 

(3)     If the clearing manager counter-signs this document then, from the time it counter-signs, it has obligations relating to it under the Code.  However, the parties acknowledge the clearing manager is not bound by this document and that its obligations in relation to it are limited to those set out in the Code.

2       Definitions

The following definitions apply in this document:

aggregate fixed amount means, in relation to a billing period, the sum of the fixed amounts for each calculation period in that billing period

aggregate floating amount means, in relation to a billing period, the sum of the floating amounts for each calculation period in that billing period

business day means any day of the week except Saturdays, Sundays, national holidays, the day observed as Wellington Anniversary Day, and any other day from time to time declared by the Authority not to be a business day by notice to each registered participant

calculation period means a trading period during the term

commencement date means the date specified as such in the schedule

expiry date means the date specified as such in the schedule

fixed amount means, in relation to a calculation period, an amount calculated using the following formula:

fixed amount = notional quantity x fixed price

fixed price means, in relation to a calculation period, the amount specified as such for that calculation period in the schedule

fixed price payer means, in relation to a hedge settlement agreement, the party specified as such in the schedule

floating amount means, in relation to a calculation period, an amount calculated using the following formula:

floating amount = notional quantity x floating price

floating price means, in relation to a calculation period, the final price per MWh for that calculation period by reference to the hedge reference point [rounded to two decimal places]

floating price payer means, in relation to a hedge settlement agreement, the party specified as such in the schedule

hedge reference point means the grid exit point specified as such in the schedule

hedge settlement amount means, in relation to a billing period, the absolute value of the amount calculated by subtracting the aggregate floating amount from the aggregate fixed amount

notional quantity means, in relation to a calculation period, the number of MWhs specified as such in the schedule for that calculation period

settlement date means the date on which payments are due under clause 14.31 of the Code

term means the period from 00.00 hours on the commencement date until 23.59 hours on the date on which the hedge settlement agreement terminates.

3       Payment of hedge settlement amounts

In relation to a billing period:

(a)     if the aggregate floating amount exceeds the aggregate fixed amount:

(i)      the floating price payer must pay the clearing manager an amount equal to the hedge settlement amount in relation to that billing period; and

(ii)     the clearing manager must pay the fixed price payer an amount equal to the hedge settlement amount in relation to that billing period,

on the relevant settlement date; and

(b)     if the aggregate fixed amount exceeds the aggregate floating amount:

(i)      the fixed price payer must pay the clearing manager an amount equal to the hedge settlement amount in relation to that billing period; and

(ii)     the clearing manager must pay the floating price payer an amount equal to the hedge settlement amount in relation to that billing period,

on the relevant settlement date; and

(c)     the clearing manager must calculate the amounts to be payable by and to the parties and advise each party of those amounts by the 5th business day of the month following the billing period. If either party notifies the clearing manager in writing by the 7th business day of the month following the billing period of any issues with the amounts the clearing manager has advised are to be payable, the clearing manager will use reasonable endeavours to correct the issues before issuing invoices on the 9th business day of the month following the billing period under clause 14.18(2) of the Code.

4       Termination

This hedge settlement agreement terminates on the earlier of:

(a)     the expiry date; and

(b)     the date on which it is cancelled under the Code.

5       Other provisions

(1)     The fixed price is inclusive of any additional costs arising due to carbon charges.

(2)     Where the terms of this hedge settlement agreement include reference to—

(a)     day, this means both business days and non-business days:

(b)     weekday, this means a business day:

(c)     weekend, this means non-business days.

(3)     Where daylight savings starts or ends during the term of this hedge settlement agreement, the clearing manager will calculate the fixed amounts and floating amounts for the days on which daylight savings starts or ends in the same way the clearing manager calculates the sale and purchase of electricity for these days.

 

EXECUTION

 

[Execution Block Party A]

 

[Execution Block Party B]

 

The clearing manager accepts the lodgement of this hedge settlement agreement by counter-signing it.

 

[Execution Block Clearing Manager]

 

SCHEDULE
TERMS OF HEDGE SETTLEMENT AGREEMENT

Hedge settlement agreement terms

Commencement Date

[Insert date]

Expiry Date

[Insert date]

Fixed Price Payer

[Party A] [Party B]

Floating Price Payer

[Party A] [Party B]

Notional Quantity

[insert number] MWh for each calculation period

Fixed Price

$[insert amount] /MWh

Hedge Reference Point

[insert grid exit point]

Schedule 14.4, Form 1, Heading: amended, on 1 April 2025, by clause 25 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2025.

Schedule 14.4, Schedule to Form 1: amended, on 24 March 2015, by clause 20 of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 1, clause 2 business day: inserted, on 1 March 2024, by clause 100 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 1, clause 3(b): amended, on 1 March 2024, by clause 101(a) of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 1, clause 3(c): inserted, on 1 March 2024, by clause 101(b) of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 1, clause 5: replaced, on 1 March 2024, by clause 102 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

 

 

Form 2: Cap/Floor Calculation Period Price

 

[Note (not for inclusion in form):  This form can be used to achieve both a capped price and a floor price.]

 

Date:  [Enter date]

 

Party A

 

Party B

 

 

1       Lodging of hedge settlement agreement

(1)     Party A and Party B (the parties) submit this hedge settlement agreement to the clearing manager, as contemplated by clause 14.8 of the Electricity Industry Participation Code 2010 (the Code).  Terms that are used in this agreement but not defined bear the meaning given to them in the Code.

(2)     By submitting this hedge settlement agreement to the clearing manager in accordance with clause 14.8 of the Code, the parties agree to be bound by the terms set out below from the time at which the clearing manager counter-signs it. 

(3)     If the clearing manager counter-signs this document then, from the time it counter-signs, it has obligations relating to it under the Code.  However, the parties acknowledge the clearing manager is not bound by this document and that its obligations in relation to it are limited to those set out in the Code.

2       Definitions

The following definitions apply in this document:

business day means any day of the week except Saturdays, Sundays, national holidays, the day observed as Wellington Anniversary Day, and any other day from time to time declared by the Authority not to be a business day by notice to each registered participant

calculation period means a trading period during the term

calculation period premium means, in relation to a calculation period, the amount specified as such in the schedule for that calculation period

calculation period settlement amount means, in relation to a calculation period, an amount calculated using the following formula:

calculation period settlement amount = notional quantity x strike price differential

cash settlement amount means, in relation to a billing period, the sum of the calculation period settlement amounts for each calculation period in that billing period

commencement date means the date specified as such in the schedule

expiry date means the date specified as such in the schedule

floating price means, in relation to a calculation period, the final price per MWh for that calculation period by reference to the hedge reference point [rounded to two decimal places]

hedge reference point means the grid exit point specified as such in the schedule

notional quantity means, in relation to a calculation period, the number of MWhs specified as such in the schedule for that calculation period

option buyer means, in relation to a hedge settlement agreement, the party specified as such in the schedule

option premium means, in relation to a billing period, the sum of the calculation period premiums for each calculation period in that billing period

option seller means, in relation to a hedge settlement agreement, the party specified as such in the schedule

option type means either a put option or a call option as specified in the schedule

settlement date means the date on which payments are due under clause 14.31 of the Code

strike price means, in relation to a calculation period, the amount specified as such in the schedule

strike price differential means, in relation to a calculation period, an amount equal to:

(a)     if the option type is a put option, the greater of the strike price minus the floating price and zero:

(b)     if the option type is a call option, the greater of the floating price minus the strike price and zero

term means the period from 00.00 hours on the commencement date until 23.59 hours on the date on which the hedge settlement agreement terminates.

3       Payment of hedge settlement amounts

(1)     In relation to a billing period:

(a)     the option buyer must pay the clearing manager an amount equal to the option premium for that billing period; and

(b)     the clearing manager must pay the option seller an amount equal to the option premium for that billing period; and

(c)     the option seller must pay the clearing manager an amount equal to the cash settlement amount for that billing period; and

(d)     the clearing manager must pay the option buyer an amount equal to the cash settlement amount for that billing period,

on the relevant settlement date.

(2)     In relation to a billing period, the clearing manager must calculate the amounts to be payable by and to the parties and advise each party of those amounts by the 5th business day of the month following the billing period. If either party notifies the clearing manager in writing by the 7th business day of the month following the billing period of any issues with the amounts the clearing manager has advised are to be payable, the clearing manager will use reasonable endeavours to correct the issues before issuing invoices on the 9th business day of the month following the billing period under clause 14.18(2) of the Code.4       Termination

This hedge settlement agreement terminates on the earlier of:

(a)     the expiry date; and

(b)     the date on which it is cancelled under the Code.

5       Other provisions

(1)     The strike price is inclusive of any additional costs arising due to carbon charges.

(2)     Where the terms of this hedge settlement agreement include reference to—

(a)     day, this means both business days and non-business days:

(b)     weekday, this means a business day:

(c)     weekend, this means non-business days.

(3)     Where daylight savings starts or ends during the term of this hedge settlement agreement, the clearing manager will calculate the calculation period premium and calculation period settlement amounts for these days in the same way the clearing manager calculates the sale and purchase of electricity for these days.

 

EXECUTION

 

[Execution Block Party A]

 

[Execution Block Party B]

 

The clearing manager accepts the lodgement of this hedge settlement agreement by counter-signing it.

 

[Execution Block Clearing Manager]

 

SCHEDULE
TERMS OF HEDGE SETTLEMENT AGREEMENT

Hedge settlement agreement terms

Commencement Date

[Insert date]

Expiry Date

[Insert date]

Option Buyer

[Party A] [Party B]

Option Seller

[Party A] [Party B]

Option Type

[Call Option] [Put Option]

Notional Quantity

[insert number] MWh for each calculation period

Strike Price

$[insert amount] /MWh

Calculation Period Premium

$[insert amount] for each calculation period

Hedge Reference Point

[insert grid exit point]

Schedule 14.4, Schedule to Form 2: amended, on 24 March 2015, by clause 21 of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 2, clause 2 business day: inserted, on 1 March 2024, by clause 103 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 2, clause 3(2): inserted, on 1 March 2024, by clause 104 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 2, clause 5: replaced, on 1 March 2024, by clause 105 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

 

Form 3: Cap/Floor Average Price

 

[Note (not for inclusion in form):  This form can be used to achieve both a capped average price over a defined period and a floor average price over a period.]

 

Date:  [Enter date]

 

Party A

 

Party B

 

 

1       Lodging of hedge settlement agreement

(1)     Party A and Party B (the parties) submit this hedge settlement agreement to the clearing manager, as contemplated by clause 14.8 of the Electricity Industry Participation Code 2010 (the Code).  Terms that are used in this agreement but not defined bear the meaning given to them in the Code.

(2)     By submitting this hedge settlement agreement to the clearing manager in accordance with clause 14.8 of the Code, the parties agree to be bound by the terms set out below from the time at which the clearing manager counter-signs it. 

(3)     If the clearing manager counter-signs this document then, from the time it counter-signs, it has obligations relating to it under the Code.  However, the parties acknowledge the clearing manager is not bound by this document and that its obligations in relation to it are limited to those set out in the Code.

2       Definitions

The following definitions apply in this document:

average floating price means, in relation to an option period, an amount calculated using the following formula:

average floating price = option period floating amount ÷ option period notional quantity

business day means any day of the week except Saturdays, Sundays, national holidays, the day observed as Wellington Anniversary Day, and any other day from time to time declared by the Authority not to be a business day by notice to each registered participant

calculation period means a trading period during the term

calculation period floating amount means, in relation to a calculation period, an amount calculated using the following formula:

calculation period floating amount = notional quantity x floating price

calculation period notional quantity [Revoked]

calculation period premium means, in relation to a calculation period, the amount specified as such in the schedule for that calculation period

cash settlement amount means, in relation to a billing period, the sum of the option period settlement amounts for each option period in that billing period

commencement date means the date specified as such in the schedule

expiry date means the date specified as such in the schedule

floating price means, in relation to a calculation period, the final price in dollars per MWh for that calculation period by reference to the hedge reference point [rounded to two decimal places]

hedge reference point means the grid exit point specified as such in the schedule

notional quantity means, in relation to a calculation period, the amount of electricity (measured in MWh) specified as such in the schedule for that calculation period

option buyer means, in relation to a hedge settlement agreement, the party specified as such in the schedule

option period means each period during the term specified as such in the schedule

option period floating amount means, in relation to an option period, an amount equal to the aggregate of the calculation period floating amounts for each calculation period in that option period

option period notional quantity means, in relation to an option period, the sum of the notional quantities for each calculation period in the option period

option period premium means, in relation to an option period, the sum of the calculation period premium for each calculation period in the option period

option period settlement amount means, in relation to an option period, an amount calculated using the following formula:

option period settlement amount = option period notional quantity x strike price differential

option premium means, in relation to a billing period, the sum of the option period premiums for each option period in that billing period

option seller means, in relation to a hedge settlement agreement, the party specified as such in the schedule

option type means either a put option or a call option as specified in the schedule

settlement date means the date on which payments are due under clause 14.31 of the Code

strike price means, in relation to an option period, the amount specified as such in the schedule

strike price differential means, in relation to an option period, an amount equal to:

(a)     if the option type is a put option, the greater of the strike price minus the average floating price and zero:

(b)     if the option type is a call option, the greater of the average floating price minus the strike price and zero

term means the period from 00.00 hours on the commencement date until 23.59 hours on the date on which the hedge settlement agreement terminates.

3       Payment of hedge settlement amounts

(1)     In relation to a billing period:

(a)     the option buyer must pay the clearing manager an amount equal to the option premium for that billing period; and

(b)     the clearing manager must pay the option seller an amount equal to the option premium for that billing period; and

(c)     the option seller must pay the clearing manager an amount equal to the cash settlement amount for that billing period; and

(d)     the clearing manager must pay the option buyer an amount equal to the cash settlement amount for that billing period,

on the relevant settlement date.

(2)     In relation to a billing period, the clearing manager must calculate the amounts to be payable by and to the parties and advise each party of those amounts by the 5th business day of the month following the billing period. If either party notifies the clearing manager in writing by the 7th business day of the month following the billing period of any issues with the amounts the clearing manager has advised are to be payable, the clearing manager will use reasonable endeavours to correct the issues before issuing invoices on the 9th business day of the month following the billing period under clause 14.18(2) of the Code.

4       Termination

This hedge settlement agreement terminates on the earlier of:

(a)     the expiry date; and

(b)     the date on which it is cancelled under the Code.

5       Other provisions

(1)     The strike price is inclusive of any additional costs arising due to carbon charges.

(2)     Where the terms of this hedge settlement agreement include reference to—

(a)     day, this means both business days and non-business days:

(b)     weekday, this means a business day:

(c)     weekend, this means non-business days.

(3)     Where daylight savings starts or ends during the term of this hedge settlement agreement, the clearing manager will calculate the calculation period premium and option period settlement amounts for these days in the same way the clearing manager calculates the sale and purchase of electricity for these days.

 

 

EXECUTION

 

[Execution Block Party A]

 

[Execution Block Party B]

 

 

The clearing manager accepts the lodgement of this hedge settlement agreement by counter-signing it.

 

[Execution Block Clearing Manager]

 

SCHEDULE
TERMS OF HEDGE SETTLEMENT AGREEMENT

Hedge settlement agreement terms

Commencement Date

[Insert date]

Expiry Date

[Insert date]

Option Buyer

[Party A] [Party B]

Option Seller

[Party A] [Party B]

Option Type

[Call Option] [Put Option]

Option Period

[Each day] [From 00.00 hours until immediately before 00.00 hours on the next day] [first period being nn and last period being mm] [during the term.]

Notional Quantity

[insert number MWh] [Table of Notional Quantities (in MWh per calculation period) to be inserted]

Strike Price

$[insert amount/MWh] – [Table of Strike Prices to be inserted]

Calculation Period Premium

$[insert amount] for each calculation period of option period. [Table of Premiums to be inserted]

Hedge Reference Point

[insert grid exit point]

Schedule 14.4, Form 3, clause 2, formula in the definition of average floating price: amended, on 24 March 2015, by clause 22(1)(a) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, formula in the definition of calculation period floating amount: amended, on 24 March 2015, by clause 22(1)(b) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, definition of calculation period notional quantity: revoked, on 24 March 2015, by clause 22(1)(c) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, definition of calculation period premium: inserted, on 24 March 2015, by clause 22(1)(d) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, definition of floating price: amended, on 24 March 2015, by clause 22(1)(e) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, definition of notional quantity: substituted, on 24 March 2015, by clause 22(1)(f) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, definition of option period notional quantity: inserted, on 24 March 2015, by clause 22(1)(g) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, definition of option period premium: substituted, on 24 March 2015, by clause 22(1)(h) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2, formula in the definition of option period settlement amount: amended, on 24 March 2015, by clause 22(1)(i) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Schedule to Form 3: amended, on 24 March 2015, by clause 22(2) of the Electricity Industry Participation Code Amendment (Settlement and Prudential Security) 2014.

Schedule 14.4, Form 3, clause 2 business day: inserted, on 1 March 2024, by clause 106 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 3, clause 3(2): inserted, on 1 March 2024, by clause 107 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.

Schedule 14.4, Form 3, clause 5: amended, on 1 March 2024, by clause 108 of the Electricity Industry Participation Code Amendment (Code Review Programme) 2024.