Letter to Toby Stevenson, Chairman, NZEM Rules Committee
[ Last Updated 20 February 2006 ]
7 December 2001
Dear Mr Stevenson
As you know, the Government Policy Statement (GPS), issued in December 2000, sets out specific requirements for industry action, including a requirement that the Electricity Governance Board (EGB) develop rules in specified areas. The GPS also requires the Chair of the Electricity Governance Establishment Project to report to me every two months on progress in implementing the GPS.
I have been receiving regular reports on progress from EGEC. These reports have focussed on issues EGEC itself is progressing. However many aspects of the GPS fall outside the EGEP work stream. Work on most of the remaining issues is progressing in other fora, including NZEM.
My interest lies in outcomes, that is in ensuring work is progressing to meet the objectives contained in the guiding principles for the electricity industry as set out in the GPS. I am accordingly writing to the lead agency for each of the issues, including yourself, seeking both co-operation with progressing them as soon as possible, and bi-monthly progress reports like those received from EGEP.
The issues in the GPS that I understand NZEM has lead responsibility for are:
- Release of information on generator offers; and
- Development of a real time market and promotion of demand-side participation.
I understand NZEM also has an interest in arrangements in event of retailer insolvency (possibly in conjunction with MARIA).
As well, I understand that NZEM has an interest in work led by Transpower on promotion of financial instruments to manage transmission risk.
It would be useful if your bi-monthly progress reports coincided with those from EGEP. I would therefore appreciate receiving your first report before Christmas, and subsequent reports every two months starting from the end of February 2002. It is important that the reports include specific forward looking timeframes and milestones. I propose that your reports and my replies (together with this letter) be made public as is the case with EGEP reports.
In terms of the work on arrangements in event of retailer insolvency, I suggest that you and the Chair of MARIA provide me with single joint reports if this work is progressed on a joint basis.
I believe that the market overall would have worked better during the past winter had some of the reforms specified in the GPS been fully implemented (such as those relating to demand side participation in the market, and release of information on generator offers). It is therefore important that measures that impact on winter security be implemented prior to next winter as a precaution against the possibility of entering next winter with low lake levels.
The attached table sets out the GPS issues, the lead agency for each and the specific issues I would like completed well before next winter. Some of the issues in the table associated with winter security have completion dates that are during or after the winter (such as transmission pricing and grid development). These dates reflect work programmes underway. I nevertheless expect good progress to have been made, and significant milestones to have been reached on these issues, by the beginning of winter.
I am asking all agencies to review their timetables for work they are leading on winter security issues. I would therefore appreciate your advice on the possibility of the work NZEM is doing in these areas being completed by the dates specified in the table.
Thank you for your consideration of my request for formal bi-monthly reporting on progress with issues in the GPS, and for your response to my request that work on key issues be completed well before the beginning of next winter.
Yours sincerely
Hon Pete Hodgson
Minister of Energy
Back to Top