Industry and market monitoring at the Electricity Authority

Phil Bishop, Electricity Commission

and

Ramu Naidoo, PSC

26 October 2010

2

Overview

• Electricity Authority – objective and functions• Key monitoring uses and activities• Markets to be monitored• Methods• Next steps• vSPD (vee-SPuD)• Overview of formulation• Applications to date• Future work

3

Focused objective

• Authority’s objective• promote competition in, reliable supply by, and the efficient operation

of, the electricity industry for the long-term benefit of consumers (clause 15, Electricity Industry Act 2010)

• Commission objectives and outcomes that are not objectives of the Authority include:• fairness• environmental sustainability • promotion of electricity efficiency• c.f. sections 172N and 172O of the Electricity Act 1992 (as amended)

4

Functions of the AuthoritySee clause 16:

a) to maintain a register of industry participants

b) to make and administer the Electricity Industry Participation Code

c) to monitor compliance with the Act, the regulations, and the Code

d) to investigate and enforce compliance with parts 2 and 4, the regulations, and the Code

e) to investigate and enforce compliance with part 3

f) to undertake market-facilitation measures (such as providing education, guidelines, information, and model arrangements), and to monitor the operation and effectiveness of market facilitation measures

g) to undertake industry and market monitoring, and carry out and make publicly available reviews, studies, and inquiries into any matter relating to the electricity industry

h) to contract for market operation services and system operator services

i) to promote to consumers the benefits of comparing and switching retailers

j) to perform any other specific functions imposed on it under this or any other Act

5

Key uses and activities• Uses

• Inform and assist the Authority’s code development activities• Provide interested parties with sufficient information to determine if the

sector’s performance is in the long term interests of consumers• Provide additional discipline on participant’s pricing decisions (when

they possess market power)

• Activities• Routine measuring, testing, screening, comparing against

benchmarks/thresholds and reporting• Provision of data and information (data warehouse project)• One-off reviews and studies

The Authority does not seek to become the price police – that is the role of the Commerce Commission

6

Markets and prioritiesPriorities determined in recent months by the Establishment Board

1. Assess competition in NZ’s electricity markets, including: retail, wholesale, ancillary services, and forward markets

2. Assess reliability of supply – from an efficiency perspective

3. Assess transaction efficiency

Markets to be monitored1. Wholesale spot market (incl. resource adequacy)

2. Instantaneous reserves market

3. Forwards markets

4. Ancillary services markets

5. Fuels and inventories

6. Retail market

7. Distribution services market

8. Transmission services market

7

Methods• Data warehouse (access via internet)• Models• Transparent and freely available• GAMS-based and open source• E.g. vSPD with daily GDX files of input data for final pricing

cases• Matlab-based• Distributed codes and compiled executables

• EA website (monitoring page)• Routine screening and summaries• One-off reports and studies

8

User interface for GEM and vSPD

9

Data warehouse

Data Warehouse Server(ECOM039)

Internet

FTP Server(ECOM046)

Data arriving via SFTP (pushed)

Users

100% 90% 80% 70% 60% 50% 40% 30%

Service Provider

Service Provider

Analysts

10

Progress and next steps

• Progress• Data warehouse started• Guidelines on data gathering and dissemination• Core tools being developed/enhanced

• Next steps• Internal work plan (Nov)• Information paper for industry stakeholders (Dec)• Data management plan (Dec)• Adapt models to generate competition measures (Dec)• Data warehouse accessible via internet (July 2011)

11

Overview - vSPD

• SPD used as the market clearing engine (MCE) in NZ electricity market

• Mathematical formulation documented and publicly available

• vSPD based on the published mathematical formulation

• Developed using GAMS • Estimation of some input parameters (e.g.

loss segments)

12

Vectorisation

13

vSPD inputs

1 per final pricing case

(48 trade periods)

~35MB

~5MB

14

vSPD GUI – configure and solve

12

3

4

5

6

15

vSPD GUI - offers

16

vSPD outputs

17

July 09 to June 10

0

50

100

150

200

250

300

350

22-J

ul-0

929

-Jul

-09

05-A

ug-0

912

-Aug

-09

19-A

ug-0

926

-Aug

-09

02-S

ep-0

909

-Sep

-09

16-S

ep-0

923

-Sep

-09

30-S

ep-0

907

-Oct

-09

14-O

ct-0

921

-Oct

-09

28-O

ct-0

904

-Nov

-09

11-N

ov-0

918

-Nov

-09

25-N

ov-0

902

-Dec

-09

09-D

ec-0

916

-Dec

-09

23-D

ec-0

930

-Dec

-09

06-J

an-1

013

-Jan

-10

20-J

an-1

027

-Jan

-10

03-F

eb-1

010

-Feb

-10

17-F

eb-1

024

-Feb

-10

03-M

ar-1

010

-Mar

-10

17-M

ar-1

024

-Mar

-10

31-M

ar-1

007

-Apr

-10

14-A

pr-1

021

-Apr

-10

28-A

pr-1

005

-May

-10

12-M

ay-1

019

-May

-10

26-M

ay-1

002

-Jun

-10

09-J

un-1

016

-Jun

-10

23-J

un-1

030

-Jun

-10

Day

Ave

rag

e H

AY

2201

Pri

ce (

$/M

Wh

) SPD

July 09 to June 10

0

50

100

150

200

250

300

350

22-J

ul-0

929

-Jul

-09

05-A

ug-0

912

-Aug

-09

19-A

ug-0

926

-Aug

-09

02-S

ep-0

909

-Sep

-09

16-S

ep-0

923

-Sep

-09

30-S

ep-0

907

-Oct

-09

14-O

ct-0

921

-Oct

-09

28-O

ct-0

904

-Nov

-09

11-N

ov-0

918

-Nov

-09

25-N

ov-0

902

-Dec

-09

09-D

ec-0

916

-Dec

-09

23-D

ec-0

930

-Dec

-09

06-J

an-1

013

-Jan

-10

20-J

an-1

027

-Jan

-10

03-F

eb-1

010

-Feb

-10

17-F

eb-1

024

-Feb

-10

03-M

ar-1

010

-Mar

-10

17-M

ar-1

024

-Mar

-10

31-M

ar-1

007

-Apr

-10

14-A

pr-1

021

-Apr

-10

28-A

pr-1

005

-May

-10

12-M

ay-1

019

-May

-10

26-M

ay-1

002

-Jun

-10

09-J

un-1

016

-Jun

-10

23-J

un-1

030

-Jun

-10

Day

Ave

rag

e H

AY

2201

Pri

ce (

$/M

Wh

) vSPD

Price comparisonJuly 09 to June 10

0

50

100

150

200

250

300

350

22

-Ju

l-0

92

9-J

ul-

09

05

-Au

g-0

91

2-A

ug

-09

19

-Au

g-0

92

6-A

ug

-09

02

-Se

p-0

90

9-S

ep

-09

16

-Se

p-0

92

3-S

ep

-09

30

-Se

p-0

90

7-O

ct-0

91

4-O

ct-0

92

1-O

ct-0

92

8-O

ct-0

90

4-N

ov-

09

11

-No

v-0

91

8-N

ov-

09

25

-No

v-0

90

2-D

ec-

09

09

-De

c-0

91

6-D

ec-

09

23

-De

c-0

93

0-D

ec-

09

06

-Ja

n-1

01

3-J

an

-10

20

-Ja

n-1

02

7-J

an

-10

03

-Fe

b-1

01

0-F

eb

-10

17

-Fe

b-1

02

4-F

eb

-10

03

-Ma

r-1

01

0-M

ar-

10

17

-Ma

r-1

02

4-M

ar-

10

31

-Ma

r-1

00

7-A

pr-

10

14

-Ap

r-1

02

1-A

pr-

10

28

-Ap

r-1

00

5-M

ay-

10

12

-Ma

y-1

01

9-M

ay-

10

26

-Ma

y-1

00

2-J

un

-10

09

-Ju

n-1

01

6-J

un

-10

23

-Ju

n-1

03

0-J

un

-10

Day

Ave

rag

e H

AY

2201

Pri

ce (

$/M

Wh

) SPD

vSPD

18

Price comparison (cont…)

July 09 to June 10

0

20

40

60

80

100

120

140

160

22

-Ju

l-0

92

9-J

ul-

09

05

-Au

g-0

91

2-A

ug

-09

19

-Au

g-0

92

6-A

ug

-09

02

-Se

p-0

90

9-S

ep

-09

16

-Se

p-0

92

3-S

ep

-09

30

-Se

p-0

90

7-O

ct-0

91

4-O

ct-0

92

1-O

ct-0

92

8-O

ct-0

90

4-N

ov-

09

11

-No

v-0

91

8-N

ov-

09

25

-No

v-0

90

2-D

ec-

09

09

-De

c-0

91

6-D

ec-

09

23

-De

c-0

93

0-D

ec-

09

06

-Ja

n-1

01

3-J

an

-10

20

-Ja

n-1

02

7-J

an

-10

03

-Fe

b-1

01

0-F

eb

-10

17

-Fe

b-1

02

4-F

eb

-10

03

-Ma

r-1

01

0-M

ar-

10

17

-Ma

r-1

02

4-M

ar-

10

31

-Ma

r-1

00

7-A

pr-

10

14

-Ap

r-1

02

1-A

pr-

10

28

-Ap

r-1

00

5-M

ay-

10

12

-Ma

y-1

01

9-M

ay-

10

26

-Ma

y-1

00

2-J

un

-10

09

-Ju

n-1

01

6-J

un

-10

23

-Ju

n-1

03

0-J

un

-10

Day

Ave

rag

e B

EN

2201

Pri

ce (

$/M

Wh

) SPD

VSPD

19

Some applications of vSPD

• Variable reserves investigation

• Investigation of scarcity pricing implementation options within the MCE

• Market impact assessments of rule breaches

20

Ongoing and future work

• Improving quality of input data into vSPD

• Enhanced override functionality

• Additional reporting

• Further development of GUI

• Sensitivity module