1. Pursuant to section 172I of the Electricity Act 1992 (“Act”), I notify the amendment of the Electricity Governance Rules 2003 (“Rules”) under section 172H of the Act.
2. The empowering provision for the Electricity Governance Regulations, in relation to which the amendment to the Rules is made, is section 172D (1) (3) of the Act.
3. The existing procurement plan in Schedule C5 of
Part C of the Rules will be replaced in its entirety with a new Schedule C5. The key changes from the existing Schedule C5 are:
(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):
(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 cancellation 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, 140);
(g) amendment of existing clauses to increase the specificity of fast instantaneous reserve (FIR) 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).
4. Pursuant to section 172Z (4) of the Act, the reasons for my decision to amend the Rules are that:
(a) the new Schedule C5 improves the processes
by which ancillary services requirements are specified, assessed and procured, while maintaining an appropriate balance between flexibility and certainty;
(b) the new Schedule C5 improves the transparency
and clarity of the procurement plan; and
(c) the new procurement plan complies with the requirement in the Rules to review the procurement plan annually.
5. These rules come into force on 1 December 2006.
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 19th day of September 2006.
DAVID PARKER, Minister of Energy.