UTS 26 March 2011

Overview

On 26 March 2011, prices on the wholesale electricity spot market went as high as approximately $20,000/MWh over several hours for Hamilton, and regions north of Hamilton when the national grid operator, Transpower, closed part of the grid to upgrade its lines into Auckland.

We received 35 claims that an undesirable trading situation (UTS) existed on 26 March 2011.

UTS claims

The claims we received were about the offer behaviour of Genesis Energy during planned transmission outages and the consequential high interim prices in the wholesale market for electricity.

We ordered the delay of final prices for 26 March while the undesirable trading situation claims were being investigated.

Draft decision

A draft decision was published for consultation on 6 May 2011.

We were requested to publish the vectorised scheduling, pricing and dispatch cases we used to calculate the remedial pricing cases in the draft decision.

Correspondence

On 23 May 2011, Genesis Energy wrote to us raising concerns regarding our consultation process.

We responded to Genesis Energy on 25 May 2011 and Genesis Energy wrote a further letter to us on 31 May 2011.

Final UTS decision

On 15 June 2011, we published our final decision that the events of 26 March 2011 constituted a UTS.

We also published our final decision and actions to correct the undesirable trading situation of 26 March 2011.

Implementation of decision

On 21 July 2011 we considered a request from Contact Energy to defer a decision on when to publish final prices for 26 March 2011.

We decided to defer the decision to publish until we received any directions from the High Court that came from the case management conference held on 25 July 2011.

Appeals

Three appeals were filed in the High Court against our final decision that a UTS occurred.

As part of the appeal process, several parties involved in the UTS claim and investigation filed notices and memoranda stating their position regarding the final decision and the role they wish to have in the appeals.

Also, during the appeal process, the High Court extended the stay on publication of final prices. Documents relating to this stay on publication are included below.

On 27 February 2012, the High Court delivered its judgement that the Authority made:

• no error of law upon which its conclusions that a UTS existed on 26 March 2011 could be challenged
• no error of law in reaching a conclusion as to the appropriate remedy for the UTS on 26 March 2011.