The Electricity Commission makes no attempt at its own salvation in its submission to the electricity market review, beyond pointing out it is already working hard on most of the most complex areas of recommendations. The EC also expresses a fear that the Commerce Commission will prove the wrong place to judge national grid investment proposals and that there will be a loss of institutional industry knowledge and capacity if specific expertise currently housed in the EC is dispersed to multiple Govt agencies.
Below is a sample of the EC’s views on some major sector issues:

On nodal pricing: The accuracy of nodal pricing is important for transmission pricing and locational hedging. The EC is due to issue a discussion paper proposing three possible approaches: Locational Rental Allocations (LRAs); Financial Transmission Rights; and a hybrid model - which includes LRA and FTR components.

On smart meters: No international agreement on a protocol for communications between smart meters, smart appliances and home display units yet exists, although work is under way. “Until such a protocol is developed challenges will remain with respect to the rate of (truly) smart meter roll outs, and the best technology choices for consumers.”

On sector-based appointments to the Electricity Market Authority: Appointments on a sectoral basis “may raise the risk that members feel pressure to advocate for the interest group who nominated them, rather than pursue the objective of the Electricity Market Authority independently.” Sector groups should be consulted and appointments should be made by the Governor-General.
On the Commerce Commission scrutinising Transpower’s investment proposals, worth at least $2bn over the next five years: “The Commerce Commission does not currently have the engineering expertise and electricity industry experience to adequately scrutinise major transmission investment proposals. Acquiring and retaining that expertise is likely to be a challenge given the intermittent basis on which it would be required.” The EC suggests instead that investment decision scrutiny should remain with the new EMA, and that if it doesn’t, duplication of effort and resource will occur, along with potential conflict if the EMA’s market rule-making ends up conflicting with the CC’s transmission investment recommendations.

Transferring energy forecasting to the Ministry of Economic Development risks dispersing expertise built up by the commission to various agencies, risking lower quality forecasting.

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