Follow-up consultation opens to improve the default distributor agreement

The Electricity Authority Te Mana Hiko is seeking further feedback on proposed changes to improve the default distributor agreement (DDA) template.

The DDA template sets out the requirements for agreements between distributors and retailers wanting to operate on distributors’ networks. It contains a set of default terms covering how distributors and retailers will work together aiming to provide electricity to consumers effectively, efficiently and reliably.

The default agreement is designed to simplify negotiations and clarify requirements, enabling more competition between retailers, and reducing compliance costs, both of which can result in lower prices for consumers.

The proposed changes will support improved reliability and quality of electricity supply, as well as benefitting consumers by incentivising distributors to minimise disruptions.

More specifically, the proposals aim to reduce distribution charges for periods of electricity supply interruptions to distribution networks, including during national emergencies, and ensure the reductions are passed on to consumers. They also simplify provisions relating to use of money adjustments.

The consultation period is four weeks, closing at 5pm on Wednesday 31 July 2024.

This follows the Authority’s earlier consultation on a broader suite of proposed changes to the DDA template and consumption data template that closed late last year.

Stakeholder feedback from the initial consultation has informed proposed material changes to two of the original proposals, as well as new related clauses in both the DDA and the Electricity Industry Participation Code.

We are seeking views on these proposals to ensure they are workable for distributors and retailers and support the Authority’s objective to deliver benefits to consumers. Feedback on these four clauses aim to resolve the remaining issues before final decisions are made.

The proposed changes are to:

• revise DDA clause 9.10 (Reduction of charges due to electricity supply interruption) to align the Authority’s approach with the regime in Part 4 of the Commerce Act. This is so distributors are not penalised twice for an interrupted service.
• revise DDA clause 33.2 (definition of ‘use of money adjustment’) to reduce potential implementation costs for distributors through simplifying interest calculations and dates around invoicing.
• create a new Code clause 12.6A (Retailers must pass-through reduction in distribution charges) to require retailers to pass-through electricity supply interruption charge reductions to consumers.
• create a new DDA clause 9.11 (Reduction of charges due to state of emergency) to reduce distribution charges in states of emergency where a consumer can’t access electricity and have sought disconnection, but their supply can’t be disconnected.

The broader set of proposed changes to the DDA and consumption use templates aim to lower costs for consumers by promoting competition in the retail electricity market and supporting more efficient processes that can minimise operational costs so benefits flow through to consumers.

This project is part of the Authority’s focus on improvements across distribution network regulatory settings.

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