Customer compensation increases during an official conservation campaign

We will be increasing the minimum weekly amount (MWA) retailers pay to customers during an official conservation campaign to $12.00 per week from 1 August 2023.

We last reviewed this payment in 2019, when it remained at $10.50.

Official conservation campaigns are one of the key tools that enable Transpower, as system operator, to manage security of supply emergencies.

Under the Electricity Industry Participation Code, all retailers are required to pay their qualifying customers a weekly amount of financial compensation for their reduction in electricity usage if the system operator has commenced an official conservation campaign.

This compensation is a payment that must be at least the minimum weekly amount per week.

The minimum weekly amount is based on the average estimated rates of consumption, the electricity saved, and the value of those savings to retailers. It is designed to be approximately cost-neutral to retailers.

There are three important effects from retailers needing to providing compensation for their customers’ electricity savings during an official conservation campaign:

• it incentivises retailers to manage spot price risk appropriately, through appropriate hedges to avoid an OCC (and therefore avoid paying compensation)
• it incentivises generators to invest in last-resort dry-year generation (to fulfil their hedge obligations)
• it encourages consumers to conserve energy should an OCC be called (through compensation payments).

The increase to the minimum weekly payment is one of the ways that the Electricity Authority can ensure the electricity system operates efficiently while protecting the interests of domestic consumers and small business consumers in relation to the supply of their electricity.

Learn more:

• Security of supply policy
• Retailers' obligations
• Decision paper - 2022 review of the minimum weekly amount payable during an Official Conservation campaign