Review of the application of loss and constraint excess to the settlement of Financial Transmission Rights

Upcoming Open Closed Decision

View submissions Submissions closed 22 July 2026

Decision

We've decided to amend clause 14.16 and revoke Schedule 14.3 of the Electricity Industry Participation Code 2010 (Code) to support the evolution of the Financial Transmission Rights (FTR) market.

We've decided to amend the Code to require the clearing manager to determine the total amount of loss and constraint excess (LCE) and make this full amount available for the settlement of the FTR market. This removes the requirement for the FTR manager to calculate the FTR rentals amount.

Any LCE or auction income that is not used in the settlement of the FTR market will continue to be allocated to transmission customers by the Grid Owner (Transpower).

Thanks to all who provided feedback.

Decision paper

Making all loss and constraint excess available to settle Financial Transmission Rights - Decision paper

Appendix A - Final Code amendment

Consultation

This consultation sought feedback on a proposal to remove the requirement for Transpower to calculate the amount of loss and constraint excess (LCE) to be allocated to the settlement of the FTR market and instead make all LCE available for the settlement of FTRs.

The proposal would amend clause 14.16 and revoke Schedule 14.3 of the Code. Any residual LCE and auction income not used in the settlement of the FTR market would continue to be allocated to Transpower to be rebated to transmission customers.

This change would support the efficient evolution of the FTR market, enabling it to better meet participants’ needs when managing locational price risk. This is particularly important as the wholesale market transitions to a renewables-dominant system.

Consultation paper