1. This notice of a recommendation and assessment concerning the Electricity Governance Rules 2003 (“Rules”), Rule Amendment Proposal No. 99, is issued by the Electricity Commission (“Commission”), established under the Electricity Act 1992 (“Act”), pursuant to section 172E (2) (c) of that Act.
2. Section 172E (2) (c) of the Act provides that, no later than 10 working days after making a recommendation concerning the Rules to the Minister of Energy, the Commission must publicise the recommendation and
the assessment completed under section 172F of the Act.
Recommendation
3. On 18 September 2006, the Commission recommended that the existing Schedule C5 of Part C of the Rules, which contains the procurement plan, be replaced in its entirety with a new Schedule C5.
Recommended Amendments to the Rules
4. The key changes between the existing Schedule C5 and the one recommended by the Commission are set out below:
(a) an increase in the system operator’s standard
charge-out rates for administrative costs relating to procurement (clause 45);
(b) new clauses to be included in any new long-term contract for over-frequency reserve, voltage support or black start (clauses 75 to 77) to specify:
(i) the system operator can cancel a contract by giving the service provider one month’s notice if, in the system operator’s reasonable opinion, the number or duration of maintenance outages of equipment used to provide or monitor the ancillary service is such that it substantially detrimentally affects the service provider’s ability to provide or monitor the ancillary service; and
(ii) a formula for annual adjustment of the availability or event fees is to be agreed between the system operator and the ancillary services agent;
(c) an updated commentary by the system operator on the competitive cost pressures and degree of market innovation involved in ancillary service procurement for the plan year (clauses 81 to 83);
(d) clarification of the response rate required of generating units to provide frequency keeping ancillary service (clause 90);
(e) amendment of existing provisions to cancel an existing offer or submit a new or revised offer later than two hours prior to the beginning of a trading period:
(i) by extending the existing provision to situations where the system operator has issued a formal notice (clause 113);
(ii) by requiring a service provider to report all cancellations or submissions that have been made later than two hours prior to the beginning of the trading period, to the system operator in writing with an explanation for each (clause 114);
(iii) by requiring a service provider to prepare a written monthly report of all such cancellations and submissions by the 20th of the month following the month being reported (clause 114); and
(iv) by requiring the system operator to include details of any late cancellation reported to it
in the system operator’s report to the Board (clause 84);
(f) new clauses that allow the term of an ancillary service procurement contract for frequency keeping or instantaneous reserve to be shorter or longer than the term of the procurement plan (clauses 115 and 140);
(g) amendment of existing clauses to increase the specificity of fast instantaneous reserve and
the calculation of instantaneous reserve delivered
in an under-frequency event by interruptible load, including an allowance for “load pickup” (clauses 125 to 128);
(h) a new clause requiring data on the response of instantaneous reserve to be measured, recorded, and provided by generating units for thermal generating stations and hydro stations that provide a combination of tail water depressed and partly loaded spinning reserve, and by station for other hydro generating stations (clause 130);
(i) new clauses which explain the system operator will continue to procure over-frequency reserve and black start under existing long-term contracts during the term of this procurement plan unless they are terminated (clauses 157, 198); and
(j) amendment of an existing requirement for a black start service provider to progressively energise the grid from network busbars, to a requirement that it provides generation output that supports the initial charging of transmission circuits and assets, and the progressive energising of the grid at network busbars (clauses 188.3, 188.4).
5. A copy of the Commission’s recommendation and assessment is available, at no cost, on the Commission’s web site:
http://www.electricitycommission.govt.nz/rulesandregs/recommend
Dated at Wellington this 18th day of September 2006.
For and on behalf of the Electricity Commission:
PETER HARRIS, Commissioner.