Notice of Reasons for Decision
1. Pursuant to section 172I of the Electricity Act
1992, I notify the amendment of the Electricity Governance Rules 2003 (“Rules”) under section 172H of the Electricity Act 1992.
2. The empowering provisions for the electricity governance regulations in relation to which the Rules are made are sections 172D (1) (3) of the Electricity Act 1992.
3. A brief description of the nature of the amendments is as follows:
The existing policy statement in Schedule C4 of Part
C of the Rules will be replaced in its entirety with
a new Schedule C4. The key changes from the existing Schedule C4 are set out below:
(a) Changes to system operator notifications in the following areas:
(i) system operator required to advise participants if it identifies any new credible events that may result in cascade failure;
(ii) system operator required to advise participants if new environmental or system conditions advised to system operator lead the system operator to believe the loss of a double circuit transmission line could be a contingent risk;
(iii) firmer commitments by system operator to publish details of new permanent and temporary constraints;
(iv) limiting system operator’s obligation to notify participants of changes in temporary constraints to those that the system operator believes will assist it to meet the principal performance objectives;
(v) new requirement for system operator to correctly apply constraints to SPD model; and
(vi) system operator required to advise participants if it identifies new techniques to address conflicts of interest.
(b) Requirement that the system operator maintains voltage stability during and following a contingent event or extended contingent event.
(c) Changes to the system operator’s requirements to schedule sufficient reserve where there is insufficient generation offers and/or reserve offers. Under these circumstances, instead of reducing the reserve requirements, the system operator will:
(i) zero the reserve requirement for a contingent event; and
(ii) reduce demand for an extended contingent event.
(d) Removal of the explicit margins added by the system operator to reserve requirements. These provisions have been replaced by an open provision for the system operator to add an adjustment factor based on its knowledge of the power system.
(e) New requirement for system operator to notify
an asset owner if it has provided incomplete or unreliable asset capability information.
(f) Changes to demand step-change limits by purchasers. Limits are now expressed as ramping limits (40 MW per minute with no more than 75 MW in any five?minute period). The system operator must
now advise the process by which a purchaser can agree a greater limit and publish existing and new agreements. The provision for the system operator to change the step-change demand limits during the term of the policy statement has been removed.
(g) Allowance for the system operator to use any other measures that may mitigate the need to shed demand to manage events greater than those provided for by risk management policies.
(h) Rationalisation and clarification of the demand shedding policy.
(i) Provision for dynamic load distribution factors to
be used in the dispatch schedule once the system operator has implemented the software changes required.
(j) Removal of system operator reporting requirements to market administrator and the Electricity Commission, which restate requirements set out elsewhere in the Rules.
(k) Removal of provisions for the system operator to investigate or support an investigation into an asset owner’s non?compliance with the Rules, which restate requirements set out elsewhere in the Rules.
(l) Requirement that anyone connecting local networks in parallel with the grid to provide information requested by the system operator including evidence the grid owner has agreed to the parallel connection.
(m) Removal of specific future policy directions by
the system operator, which are the Electricity Commission’s business.
(n) Requirement that the system operator produce a business performance charter that describes the manner in which the system operator intends to deliver the system operator services under the Rules.
(o) Removal of part B explanatory notes from Schedule C4, which are instead to be published on the system operator’s web site.
4. Pursuant to section 172Z (4) of the Electricity Act 1992, the reasons for my decision to amend the Rules are that:
? the changes contained in the new Schedule C4
improve the policies and means by which the system operator can comply with the principal performance obligations and provide greater transparency and clarity to participants as to the policies the system operator intends to follow to meet the principal performance obligations; and
? the new policy statement complies with the Rules.
5. These rules come into force on 25 August 2005.
6. Copies of the Rules may be inspected free of charge or purchased from the Electricity Commission, Level Seven, ASB Bank Tower, 2 Hunter Street, Wellington. The Rules can also be viewed on the Electricity Commission web site:
http://www.electricitycommission.govt.nz/rulesandregs/rules
Dated at Wellington this 8th day of July 2005.
TREVOR MALLARD, Minister of Energy.