Glossary of abbreviations and terms Act Electricity Industry Act 2010 Authority Electricity Authority CAP Code Amendment Principle Code Electricity Industry Participation Code 2010 CRA Charles River Associates EECA Energy Efficiency and Conservation Authority EMS Energy Market Services (a division of Transpower) FTR Financial Transmission Right GIP Grid Injection Point GXP Grid Exit Point ICP Installation Control Point MBIE Ministry of Business, Innovation and Employment MCA Ministry of Consumer Affairs MED Ministry of Economic Development (now part of MBIE) Minister Minister of Energy and Resources NZX New Zealand Securities Exchange PPOs Principal Performance Obligations of the System Operator TASC Technical Advisory Services Contract (between the Authority and the System Operator) TPM Transmission Pricing Methodology
Real-time operations – dispatching power stations and ancillary services, monitoring and supervising operations, and coordinating the various participants; After the fact –monitoring and reporting market outcomes, and investigating events; and Support – providing systems infrastructure, providing modelling and analytical support, monitoring compliance, and supporting participants and the Authority with analysis of various issues. The breakdown of costs associated with each of these activities has been estimated and is illustrated in Figure 6, in order to identify the materiality of the costs in each area. Figure 6: Breakdown of annual system operations costs In order to explore the primary cost drivers, the exacerbators of cost, the beneficiaries, and the activities in each area, have been identified and analysed in Appendix D. A summary of this analysis is included in Table 6. Table 6: Summary analysis of system operations activities Support Activity Primary Cost Drivers Primary Exacerbators Primary Beneficiaries Operations Planning Characteristics of power system Complexity of market arrangements Complexity of security policies asset owners Generators Consumers Scheduling Characteristics of power system Complexity of market arrangements Unreliable generators and transmission Generators Purchasers Distributors Grid consumers Real-time operations Characteristics of power system Complexity of market arrangements Complexity of security policies Number of participants Unreliable generators and transmission Generators Purchasers Distributors Consumers After the fact Characteristics of power system Complexity of market arrangements Unreliable generators and transmission Generators Purchasers Distributors Grid consumers
Generators 0.1699 0.4391 0.0480 Purchasers 0.1705 0.4408 0.0086 0.3101 0.0482 Retailers 0.8962 1.5602 Distributors (incl Transpower) 0.0949 0.0268 Distributors (excl Transpower) 0.8965 Transpower 0.0167
: System Operator activities Table 10: Operations Planning Functions Operations Planning Primary Cost Drivers Primary Exacerbators Primary Beneficiaries Planning to meet Security Policy and PPOs Complexity of Security Policy and PPOs Characteristics of power system Non-compliant asset owners Generators Consumers Emergency planning Characteristics of power system Number of participants (generators, grid consumers and distributors) Generators Consumers Procuring Ancillary Services Complexity of arrangements or simple procurement) Non-compliant asset owners Generators Consumers Assessing network and generation capability Characteristics of power system Generators Consumers Outage management planning Number of generators Transmission system characteristics Generators Purchasers Grid Owner Security of supply forecasting Characteristics of power system and mix of generation types Generators Consumers Table 11: Scheduling functions Scheduling Primary Cost Drivers Primary Exacerbators Primary Beneficiaries Short-Term demand forecasting Number of grid supply points Consumers Assessing network and generation capability Characteristics of power system, mix of generation types and ancillary services Unreliable generators and transmission Generators Grid Owner Distributors Day-ahead security planning Characteristics of power system, mix of generation types and ancillary services Unreliable generators and transmission Generators Consumers Preparing schedules Complexity of wholesale market arrangements Number of participants Generators Purchasers Grid consumers Generators Purchasers Grid consumers Notifying market participants Number of participants Characteristics of participant systems Generators Purchasers Distributors Generators Purchasers Distributors Asset commissioning New transmission, distribution and generation Grid Owner Distributors Generators Grid Owner Distributors Generators
Table 12: real time operations functions Real Time Operations Primary Cost Drivers Primary Exacerbators Primary Beneficiaries System operation and dispatch Number or participants Complexity of arrangements Complexity of Security Policy and PPOs Generators Purchasers Generators Distributors Purchasers Consumers Supervising operations Number or participants Complexity of arrangements Charcteristics of power system Generators Distributors Purchasers Consumers Coordinating ancillary services Number of Ancillary Service (AS) Providers Complexity of arrangements AS Providers Generators Consumers AS Providers Table 13: After the fact analysis functions After the fact (Ex-post) Analysis Primary Cost Drivers Primary Exacerbators Primary Beneficiaries Ancillary Services monitoring Number of Ancillary Service (AS) Providers Complexity of arrangements Generators Consumers AS Providers Market monitoring and providing market information Complexity of market arrangements Characteristics of power system Degree of non-compliance Generators Purchasers Distributors Grid consumers Generators Purchasers Distributors Grid consumers System Operator reporting Complexity of market arrangements Characteristics of power system Generators Purchasers Distributors Grid consumers Generators Purchasers Distributors Grid consumers Investigating issues and analysing events Complexity of market arrangements Characteristics of power system Generators Purchasers Distributors Grid consumers Generators Purchasers Distributors Grid consumers
Table 14: Support functions Support Activity Primary Cost Drivers Primary Exacerbators Primary Beneficiaries Providing and supporting systems infrastructure (control centres, IT, communications etc) Complexity of market arrangements Characteristics of power system Number of participants Generators Purchasers Distributors Consumers Modelling, scheduling and operational tool development Characteristics of power system Complexity of market arrangements Generators Purchasers Distributors Grid consumers Participant support Characteristics of power system Complexity of market arrangements Number of participants Participants seeking support Generators Purchasers Distributors Grid consumers Service Provider compliance Characteristics of power system Complexity of market arrangements Compliance arrangements System Operator System Operator Authority support Developing the market arrangements to deliver competition, efficiency and reliability Authority Consumers