So What’s The Answer To NZ’s Electricity Market Woes?
April 8th, 2009
In the US, regulators are given some powers to move against profi-maximising “net pivotal” generators. “The short-term market operator … determines whether a supplier or a set of suppliers are jointly pivotal. If this is the case then the offers of this supplier or this set of suppliers are mitigated to some reference offer level that is based on that supplier’s variable cost of production.” Wolak is at pains to emphasise such profit-maximising activity can be legal and is no more than a company seeking to reward its shareholders, as required by law. What Wolak seems to be saying is Govts have options if they don’t like this outcome and it’s here the Ministerial Review is likely to find most meat.
Meanwhile, electricity regulatory wonks were last week head-scratching their way through the 78 page on-line report, with plenty of complaint there is too little detail yet to see how Wolak models particular aspects of the NZ system, especially hydro. But Ralph Matthes from MEUG says this is partly the point. “Everywhere else that Wolak has put his slide rule over, the information was there. In NZ, it wasn’t.” With the 2008 Winter Review report also seeking greater transparency, Matthes expects greater disclosure, balanced against the costs of collecting new information, will be an outcome of the Ministerial Review.
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