2014 Monitoring reports

A market performance enquiry following two grid events on 27 May and 18 August 2014. There was no concerning trading conduct and the high prices reflected the prevailing market conditions. However, the enquiry has highlighted some improvements that could be made.

This report explains why there were differences between the Financial Transmission Rights (FTR) tool results for FTR hubs in 2013-2014 and the results published by the FTR manager, For two of the differences, the FTR manager calculated the HVDC rental in a manner not intended by the Electrical Authority, and the calculation of the constraint excess amount was incorrect. There are also concerns with other issues.

This quantitative study based on results from New Zealand, Australia, Austria and Texas showed that switching potential was high, with declared switching over the past two years highest in New Zealand. The key driver for switching was being approached by another power company with a better deal. In New Zealand the key reasons for not switching were satisfaction with the level of service and price of their current power company.

This enquiry looked into why there were different estimates of price increases in March 2014. It focuses on information consumers received directly through communications with the four biggest retailers and three largest distribution company areas, and through the media. Direct communication was found to be transparent, but media statements contained conflicting information. This was because of different methodologies used to make calculations, and different subsets of consumers used for calculations.

This paper presents modelling of electricity demand in New Zealand. Electricity demand in New Zealand has been experiencing flattening demand in recent years. A general-to-specific approach is adopted and the electricity demand is modelled as a function of real income, electricity price, population, price of natural gas, weather, unemployment, and budget share of electricity. Long run equilibrium relationship is examined using cointegration analysis and the error correction model is built to capture short-run dynamics and for forecasting.

Electricity charges to consumers are not much higher now on average than they were in the early 1980s, while residential consumers have seen a significant increase and commercial consumers a significant reduction in charges.