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.

Locally net pivotal generation review

Letter of reply from Genesis Energy

Comment was requested from Trustpower, the System Operator, and Genesis Power Ltd.We considered a number of the issues raised by Genesis and the System Operator.

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