Stage: II (Review) Status: Complete Date completed: 30/07/2012

When Tekapo A and Albury are islanded from the grid during line maintenance, a generator that is locally net pivotal has the ability and incentive to set high local prices, in this case at about $3000/MWh.

We've since noticed a similar occurrence in respect of the Cobb generation owned by TrustPower Ltd, when it became part of a sub-network islanded from the rest of the grid during a transformer outage.

The review considered the circumstances surrounding these recent events, and the possibility for other similar events to occur in the future. The review has identified a recent change in behaviour, and the potential for about 0.2% of traded energy to be affected by locally net pivotal generation.

The review considered at a high level a number of potential remedies under the Code that might lead to more competitive outcomes, and efficient pricing in the spot market, in situations where a local generator is net-pivotal. The wholesale advisory group has added this item to their work program and will be progressing further analysis.

The wholesale advisory group reviewed the issue and produced a recommendation paper on pricing in pivotal supplier situations.

Our work programme - Pricing in a pivotal supplier situation