General news

Permanent Code amendment for materially large contracts

  • Code

The Electricity Authority has decided to make a permanent Code amendment to address the potential for inefficient price discrimination in very large contracts.

In August 2022, we introduced an urgent Code amendment in response to a potential issue we observed during our review into competition in the wholesale market.

Thanks to all those who made a submission during our consultation on a proposed permanent Code amendment (18 August to 31 October 2022). We made small changes to reflect your feedback and to clarify the intent of the policy. The permanent Code amendment will replace the urgent Code amendment and take effect on 19 May 2023.

The Code amendment prohibits generators giving effect to materially large contracts (MLCs) unless the net value from the contract to the generator is a positive relative to the generator's best alternative, or the buyer can on-sell unused electricity under the MLC without the buyer being subject to any worse terms than if they had consumed the electricity themselves.

The Code amendment provides us with greater visibility of MLCs for monitoring and compliance purposes through the disclosure obligations.

The Code amendment sets out a voluntary clearance process which gives generators the option to gain assurance that the MLC is not in breach of the Code and that we will not investigate a contract at a later date where the clearance remains valid.

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