New paper: post implementation review of wholesale information disclosure obligations

The Electricity Authority has completed a post implementation review of wholesale information disclosure obligations.

The disclosure obligations seek to improve information disclosure regulation in the wholesale market. The regulation of information disclosure helps eliminate information asymmetry amongst market participants. Information asymmetry results in transfers of wealth from uninformed to informed market participants when they trade with each other which can lead to inefficient market outcomes. Having an effective information disclosure regime is therefore a fundamental feature of a well‐functioning competitive market.

The post implementation review looks at the effects of the disclosure obligations and how participants to whom the disclosure obligations apply (major participants) have been complying with their wholesale information disclosure obligations.

High rates of compliance

Major participants have shown a high level of compliance with the Electricity Industry Participation Code 2010 (Code) and appear to be releasing wholesale information where appropriate. Half of the major participants who were required to disclose did not have any information to disclose each quarter and the remainder primarily used the planned outage platform, Planned Outage Co-ordination Process (POCP), to disclose information, followed by their own publicly accessible websites.

Few cases of exclusions

Major participants use the disclosure exclusions reasonably, rarely using exclusions to avoid publicly disclosing information. There were only two cases of non-compliance in 18 months.

No substantial increases in thermal fuel disclosure

There have been no significant changes in how major participants who hold thermal fuel information disclose this information. Major participants who use gas referred the Authority to their gas supplier for thermal fuel information. However, these suppliers are not covered by the major participants definition in the Code and the disclosure obligations do not apply to them. We concluded that all the thermal fuel related information that can be disclosed by electricity market participants is currently being disclosed.

Overall, the disclosure obligations have given the Electricity Authority more visibility over major participants‘ knowledge of wholesale information.

Some recommendations were made in the review, namely creating a single dedicated platform for non-outage information disclosure. This would require participants to submit a description of non-compliance and non-disclosure items to the Authority in confidence as soon as the participant is aware of the information. This would replace notifying the Authority through quarterly reports and working with the Gas Industry Company to gain access to the thermal fuel information currently held by gas suppliers not covered by the Disclosure Obligations.