Settlement residual allocation methodology

SRAM and rules on pass-through of settlement residual rebates by distributors

Upcoming Open Closed Decision

View submissions Submissions closed 27 September 2022

Consultation

In August and September 2022, we invited feedback on a proposed settlement residual allocation methodology (SRAM) and rules on pass-through of settlement residual rebates by distributors.

We proposed a new SRAM that would allocate settlement residue relating to each of the regions defined for the transmission pricing methodology’s (TPM) benefit-based charge simple method (using the applicable regional allocators already developed for the TPM).

We prepared indicative estimates of the impact of two SRAM options on transmission customers to help show the differences between the current approach.

Thanks to all those who provided feedback on our consultation paper. We received 15 submissions that you can view below.

Decision

When the new transmission pricing methodology (TPM) comes into force on 1 April 2023, Transpower’s existing method for allocating settlement residue (or loss and constraint excess) will become obsolete.

Following this consultation, we have decided to amend the Code to provide for the development of a new settlement residual allocation methodology, based on the simple method for the benefit-based charge in the TPM. We have also introduced requirements for distributors to pass through settlement residue to their customers.

This Code amendment will come into effect on 1 April 2023. We believe this method best aligns with our statutory objective, by improving the efficient operation of the electricity industry and promoting competition. You can read our decision paper below: