Enabling investment and innovation
Settlement residual allocation methodology
How the settlement residue is allocated amongst transmission customers, as prescribed in the Electricity Industry Participation Code 2010.
Overview
We have amended the Code and benchmark agreement (effective 1 October 2023) to include default terms which enable Transpower to recover its settlement residual allocation methodology administration costs. The amendments deem these default terms and conditions to be included in all current transmission agreements (including certain earlier agreements that are not based on the benchmark agreement).
We have updated the benchmark agreement to reflect the new transmission pricing methodology and to include the benchmark agreement as its own schedule in the Code. It will be renamed the default transmission agreement template. Read our decision paper.
In 2024, we will carry out a review of the benchmark agreement and sector changes over the last 15 years. We will assess if any changes are needed of the common quality requirements in Part 8 of the Code.
Timeline
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22 August 2023
Decision —Amend the Code and benchmark agreement to include default terms for Transpower to recover its SRAM admin costs
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17 May 2023
Development —Guidance for distributors on SRAM pass-through
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17 May 2023
Consultation —Changes to the Benchmark agreement for SRAM funding to reflect the new TPMView consultation -
2024
Review —Benchmark agreement and Part 8 of the Code
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15 November 2022
Decision —Amend the Code for new SRAM development
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16 Aug - 27 Sept 2022
Consultation —SRAM and rules on pass-through of settlement residual rebates by distributorsView consultation -
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18 Jan - 1 Mar 2022
Consultation —New Settlement Residual Allocation Methodology principlesView consultation
Project background
This project is focused on how to improve the settlement residual allocation methodology (SRAM) to:
- encourage more efficient use of the grid;
- support the right investments being made at the right time and in the right places; and
- over time, lead to relatively lower electricity prices for consumers.
For this project we amended the Code (effective 1 April 2023) to allow for a new SRAM based on the simple method for the benefit-based charge in the transmission pricing methodology. We also introduced requirements for distributors to pass through settlement residue to their customers. Read our SRAM decision paper.
In 2023, we reviewed the SRAM-related Code amendments and changes to reflect the new TPM and amended the Code and benchmark agreement to include default terms which enable Transpower to recover its SRAM administration costs.
We also updated the benchmark agreement to reflect the new TPM and to include the benchmark agreement as its own schedule in the Code. Read our decision paper.
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