Energy Competition Task Force announces new standardised super-peak hedge contract - trading begins in January

The Energy Competition Task Force (Task Force), jointly established by the Electricity Authority (the Authority) and Commerce Commission, has announced a new standardised flexibility product to improve competition in the wholesale electricity market.

Developed by industry experts from the Standardised Flexibility Product Co-design Group, the new standardised super-peak hedge contract will be available from January 2025.

The new product is a risk management tool for wholesale market participants, enabling them to manage spot price risk during the periods when demand is likely highest (mornings and evenings), and intermittent generation (eg, solar farms) may be low. This will provide more information about future electricity prices to inform investment decisions. Ultimately, consumers will benefit from more efficient competition and more affordable electricity supply for New Zealanders.

Shaun Goldsbury, Chair of the Standardised Flexibility Product Co-design Group says: “A super-peak hedge contract has a wide range of potential buyers and sellers, with various types of generation, retailers and industrial customers all potentially using the product. This fills a need not currently offered in the exchange-traded contracts on the ASX, which, which do not include super-peak products.”

The Authority established the Standardised Flexibility Product Co-design Group with members from a broad range of industry representation. The Authority is grateful for their contribution to the sector when developing this product.

The introduction of standardised flexibility products is one of four initiatives being considered by the Task Force under Package 1 to enable new generators and independent retailers to enter and better compete in the market. It also delivers the Market Development Advisory Group’s Recommendation 8 to improve price discovery and competition in flexible supply.

The Authority’s recently released Risk Management Review confirmed the value of better price discovery for super-peak hedge contracts to support retail competition.

Read the super-peak hedge contract product specification sheet

Our thanks to the Standardised Flexibility Product Co-design Group: Shaun Goldsbury, Karl Arns, Tim Boyce, Matt Carnachan, Nick Haines, Michael Jefferson, Paul Morrison, and James Tipping for their dedicated mahi on this project.