Electricity Authority notes decision on 9 August 2021 Code breaches

The Electricity Authority has noted a Rulings Panel decision published today which found Transpower New Zealand Limited, as the system operator, breached the Electricity Industry Participation Code 2010 (the Code) in relation to its management of the grid emergency on 9 August 2021.

The Rulings Panel, an independent body that assists in enforcing the Code by dealing with complaints about breaches of the Code, ordered the system operator to pay a fine of $150,000 after it admitted two breaches of the Code relating to the reasonable and prudent operator standard and the Policy Statement, that is incorporated into the Code.

The decision comes after the Authority lodged a formal complaint with the Rulings Panel in April last year which alleged four breaches of the Code by the system operator.

The Authority and the system operator reached an agreement earlier this year on the alleged breaches which led to Transpower admitting two breaches and the Authority withdrawing the other allegations.

That agreement included admissions from the system operator of its failings in respect of demand allocation, communication failures, and the issuing of an Island Shortfall Situation Notice.

“As part of the agreement the system operator has conceded that its load shed restore tool which it used to calculate and equitably allocate demand reduction during the grid emergency was not fit for purpose, was not regularly tested, not properly updated and was operated by inadequately trained staff,” says Peter Kerr, General Manager, Legal, Monitoring and Compliance (Acting).

“We lodged a formal complaint with the Rulings Panel last year because market participants need to have high trust and confidence in the system operator’s ability to carry out its obligations and functions within the market.

“Since the events of 9 August 2021 there have been a series of improvements made to apply the lessons learned during the event. Subsequent grid emergency events have been managed far more effectively,” says Kerr.

The Rulings Panel also ordered Transpower New Zealand Limited, as the system operator, to pay the Authority’s costs in the amount of $6,207.50.