Monitoring, compliance and enforcement
Review of 9 August 2021 event
A review into the 9 August 2021 electricity cut without warning that affected approximately 34,000 customers across New Zealand.
Overview
We used our statutory powers under section 16(1)(g) of the Electricity Industry Act 2010 (Act) to launch a two-phase review of the outages on 9 August 2021.
Phase 2 of this review was completed in April 2022. It focused on lessons to be learnt from the 9 August 2021 event for the Electricity Authority, lines companies, the system operator, generators, retailers and direct connect consumers.
The Phase 2 review:
- confirms the findings of our Phase 1 review, and the Ministerial Investigation, that Transpower’s coordination and communication failures meant consumers were disconnected unnecessarily
- takes into account recommendations made in the various reports and investigations looking into the 9 August events conducted by the Electricity Authority, system operator, and the Ministerial Investigation
- makes new observations and recommendations intended to create enduring, and widespread, system improvements to the management of future events.
Timeline
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1 November 2022
Review —Review of wind demand forecasting accuracy
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28 September 2021
Development —Transpower's progress on the Phase 1 recommendations
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10 September 2021
Review —Phase 1 review complete
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Related reviews and investigations
Review of wind and demand forecasting accuracy
The inaccuracy and unreliability of wind generation and demand forecasts was a factor contributing to the 9 August 2021 grid emergency event, so we conducted a review of wind generation and demand forecasting accuracy.
The increasing penetration of wind and solar generation that is already underway as New Zealand seeks to decrease reliance on fossil fuels will make accurate forecasts increasingly important. For more information, read the following reports:
Undesirable trading situation
We received an undesirable trading situation (UTS) claim from four industry participants: Haast Energy Trading Ltd, Electric Kiwi Ltd (Electric Kiwi), Flick Energy Ltd (Flick Electric) and Switch Utilities Ltd (Vocus NZ).
The claim alleged the UTS was individually and jointly caused by Contact Energy and Genesis Energy for not offering additional generation on the night of 9 August 2021.
Alleged Code breaches
We considered alleged breaches of the Code on 9 August 2021 by three participants:
- Contact Energy Ltd - We closed a case concerning an alleged breach of the Code on 9 August 2021 by Contact Energy Limited. Contact Energy was alleged to have breached clause 13.5A(2)(a) by withholding generation capacity during trading periods 37 – 42 on 9 August 2021. In December 2021, we declined to take further action on the alleged breach, on the basis that the evidence did not establish a breach of clause 13.5A.
- Genesis Energy Ltd - We discontinued an investigation into a trading conduct breach alleged of Genesis Energy Limited for not offering generation from Huntly Unit 4 on 9 August 2021. The investigation found no breach, concluding Genesis’ behaviour to not offer HLY4 for the evening of 9 August was within the realm of behaviours consistent with that of a rational generator which does not hold significant market power. Read our decision.
- Transpower as the System Operator - On 12 April 2022, we decided, under regulation 23(3)(b) of the Electricity Industry (Enforcement) Regulations 2010, to lay a formal complaint with the Rulings Panel against Transpower New Zealand Limited as the system operator. The complaint related to alleged breaches by the system operator in relation to its management of the grid emergency on 9 August 2021. Ten potential breaches of the Code were investigated, and the Authority has decided to lay a formal complaint with the Rulings Panel in relation to four alleged breaches. Read our decision.
MBIE investigation
The Minister of Energy and Resources directed MBIE to investigate the power disconnections of 9 August 2021. MBIE provides policy advice to the government on energy issues and investigated the causes and factors contributing to the power interruptions.
Many of the recommendations in MBIE’s report relate to the Electricity Authority, either in its role in determining the regulatory settings or in its role overseeing Transpower. We are working closely with Transpower in ensuring the recommendations are actioned.
We met with MBIE on 15 February 2022 to clarify recommendations in the report, particularly those with a policy focus and provided a progress update to the Minister for Energy and Resources in late March 2022.
The terms of reference and final report for this review are published on MBIE’s website: MBIE’s investigation into electricity supply interruptions of 9 August 2021.
We have work underway that will respond in part to some of the more complex, industry wide recommendations of MBIE’s report. This includes work by the Market Development Advisory Group investigating how the wholesale electricity market would operate under a renewables-based electricity system. View project.
Transpower investigation
Transpower conducted an investigation to further their understanding of the 9 August event and the industry’s response .
As system operator, Transpower has a programme of work underway to address recommendations from each of the reports on the 9 August events.
The Transpower-commissioned reviews are published on their website, see Transpower – Response to 9 August Grid Emergency.
Project background
On 9 August 2021, approximately 34,000 customers across New Zealand experienced an electricity cut without warning. In response, we launched a two-phase review into the outages using our statutory powers under section 16(1)(g) of the Electricity Industry Act 2010 (Act):
- Phase 1 review (published in September 2021) - focused on the system operator’s demand allocation tool and communication processes and protocols. The review was completed in two weeks and was aimed at providing immediate assurance that any systemic and process issues that led to the 9 August power cuts were urgently corrected.
- Phase 2 review (published in April 2022) - was wider in scope and provided a final summary of the various investigations, observations and recommendations which have been conducted by the Authority, Transpower and the Ministry of Business, Innovation and Employment.
In addition to this two-phase review, we considered alleged breaches of the Code on 9 August 2021 by three participants and an undesirable trading situation claim.
Other projects in Monitoring, compliance and enforcement
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Review of wholesale market competition
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System operation documents
The system operator regularly reviews their plans, strategies, and policy.