Notice of Reasons for Decision
1. Pursuant to section 172I of the Electricity Act 1992, I notify the amendment of the Electricity Governance Rules 2003 (“Rules”) under section 172H of the Electricity Act 1992.
2. The empowering provision for the electricity governance regulations in relation to which the Rule is made is section 172D (1) (3) of the Electricity Act 1992.
3. A brief description of the nature of the amendments is as follows:
? The recommended amendment to the Rules changes the way that event charges are calculated by inserting an administered event charge rate of $1,250.00 per MW per event into the Rules.
4. Pursuant to section 172Z (4) of the Electricity Act 1992, the reasons for my decision to amend the Rules are that:
? the current approach to setting the under-frequency event charge rate results in excessive and unstable event charges and this is likely to distort asset owner decisions leading to perverse market outcomes;
? the amendment will remove the inherent uncertainty and instability currently associated with under-frequency event charges by fixing the event charge rate in the Rules; and
? event charges will be more consistent with actual interruption costs so that participants will be incentivised to factor external costs they could impose on the market into their investment and operational decision making.
5. These Rules come into force on 1 August 2005.
6. Copies of the Rules may be inspected free of charge or purchased from the Electricity Commission, Level Seven, ASB Bank Tower, 2 Hunter Street, Wellington.
The Rules can also be viewed on the Electricity Commission web site:
http://www.electricitycommission.govt.nz/rulesandregs
Dated at Wellington this 26th day of May 2005.
TREVOR MALLARD, Minister of Energy.