General news

Authority finalises response to MDAG report

  • Policy
  • Wholesale

The Authority is prioritising completing work on seven of the fifteen recommendations in Tranche 1 and three in Tranche 2 in the Market Development Advisory Group’s (MDAG) report, which we are already progressing. This helps the benefits of these measures to be realised as soon as possible.

Since the Authority received MDAG’s final report late last year, we have undertaken a more detailed assessment of the recommendations to inform how to take forward this work. MDAG's final recommendations paper, Price Discovery in a renewables-based electricity system sets out a package of measures to strengthen the wholesale electricity market for the challenges arising from a high renewables-based electricity system.

In progress – Tranche 1 In progress – Tranche 2

Short-term forecasts (recommendation 1)

Hedge market transparency (2)

DSF activity monitoring (3)

Pricing to optimise distribution investment (4)

New reserve product (6)

FSR project (as it relates to DSF) (11)

FSR project (governance) (14)

Information on development pipeline (17)

Sunset profiling (18)

Information programme for opinion-makers (22)

On 13 February 2024, the Authority decided how we will incorporate MDAG's recommendations into our work programme. We will do so as a sequenced package, consistent with MDAG's model. We recognise how critical this work is to support a managed transition to a more renewables-based electricity system.

Add to work programme – Tranche 1 Investigate further – Tranche 1

Stress testing (recommendation 7)

New flexibility products (standardised) (8)

Contract process disclosure rules (9)

Competition dashboard (12)

Virtual disaggregation (high-level outline) (13)

Seasonal outlook report (15)

Price-driven secure distribution dispatch (5)

DSF interface systems and protocols (10)

The Authority will commence work on the remaining eight Tranche 1 recommendations over 2024/25. Six of these will be added to our work programme; they align well with existing work and capability. Two require further work to investigate and scope. As part of this, we will also consider whether there are alternatives to achieve the desired outcomes.

The recommendations in tranches 2 and 3 will be considered and incorporated into our work programme in due course. A number of these are contingent on the implementation and outcomes from Tranche 1 initiatives.

Our approach to this work will seek to respect MDAG’s intention that the recommendations are implemented as a package whilst we manage what is already shaping up to be a busy regulatory work programme for the Authority in 2024. We look forward to engaging with participants and other stakeholders to further discuss the recommendations over the next few months.

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