This notice of a recommendation and assessment concerning the Electricity Governance Rules 2003 (“Rules”), Rule Amendment Proposal No. 79, is issued by the Electricity Commission (“Commission”), established under the Electricity Act 1992 (“Act”), pursuant to section 172E (2) (c) of that Act.
Section 172E (2) (c) provides that, no later than 10 working days after making a recommendation concerning the Rules to the Minister of Energy, the Commission must publicise the recommendation and the assessment completed under section 172F of the Act.
Recommendation
The Commission made a recommendation that the existing Schedule C5 of Part C of the Rules, which contains the procurement plan, be replaced in its entirety with a new Schedule C5 on 19 August 2005.
Recommended Amendments to the Rules
The key changes from the existing Schedule C5 and the one recommended by the Commission are set out below:
(a) Changes to assessment methodology for instantaneous reserve and frequency keeping and to the proposed contracting process that increase the latitude for the parties to negotiate terms and conditions as long as none are inconsistent with the key contracting terms set out in the procurement plan.
(b) Changes to every ancillary service to make provision for the system operator to enter into ancillary service procurement contracts with other providers at any time during the procurement plan period.
(c) A number of the key contracting terms have been amended and some new ones inserted, largely relating to the monitoring and compliance arrangements, including:
(i) the system operator can terminate an ancillary service schedule if an ancillary service agent (ASA) commits a material breach of the contract in relation to that service and such breach, if remediable, is not remedied to the reasonable satisfaction of the system operator within 10 business days of the notice, or such longer period as the system operator may determine;
(ii) the system operator can make a claim that
an ASA has failed or is unable to meet a performance requirement in the ancillary service procurement contract (ASPC) or cannot comply with a dispatch instruction. If the claim is accepted (either voluntarily or after dispute resolution), the system operator will not be liable to pay the ASA for the relevant period and the ASA will take remedial action;
(iii) “baseline” tests required for some ancillary services will be carried out by the ASAs at their own expense;
(iv) the system operator may request the ASAs to carry out an “on-demand” test of the equipment used to provide or monitor any ancillary service and/or provide a statement of the capability and operational limitations of the equipment;
(v) the system operator will pay the ASA’s reasonable costs of an “on-demand” test unless the equipment fails the test or the sole reason for the test was to verify the success of any remedial action;
(vi) if any equipment used to provide or monitor an ancillary service (except for non-mandatory frequency keeping or instantaneous reserve) fails to meet any test, the ASAs must re-test
the equipment at their own expense until the equipment passes the test, unless otherwise agreed with the system operator, and the ASAs will be deemed incapable of providing the ancillary service until the test is passed;
(vii) the system operator may inspect any equipment used by the ASAs to provide or monitor the ancillary service upon at least five day’s notice of the intention to inspect the equipment but may give less or no notice if the system operator reasonably believes the equipment is being used in a manner inconsistent with the ASPC. The system operator must not interfere unreasonably with the ASA’s business in carrying out such an inspection; and
(viii) the system operator can assign its interest in the ASPC to another party taking over the role of system operator, otherwise assignment by either party must have the consent of the other party.
(d) The frequency of system operator reporting of ancillary service settlement volumes, prices, costs etc, which is currently unspecified is to be carried out monthly.
(e) A number of changes to the performance requirements and technical specifications for various ancillary services:
(i) New requirement for ASAs to maintain their monitoring equipment in accordance with good industry practice (all ancillary services);
(ii) new requirement that the measurement of time error must be performed with a global positioning system clock or agreed equivalent (associated with provision of frequency keeping);
(iii) new obligation on system operator to use reasonable endeavours to dispatch frequency keepers at least five minutes in advance of the start or end of the relevant trading period, as
the case may be;
(iv) new requirement that the control maximum be greater than or equal to the control minimum plus twice the range of the offered MW band for the frequency keeping site;
(v) description of the method the system operator will use to assess whether or not the ASAs have delivered a quantity of instantaneous reserve following an under frequency event that is consistent with the quantity dispatched;
(vi) new requirement that the relay equipment for over frequency reserve must immediately arm or disarm (as appropriate) when it receives a remote arming or disarming signal from the system operator’s co-ordination centre;
(vii) new requirement for the ASAs to provide voltage support equipment that will be available at all times to provide voltage support, is able to respond when dispatched, and is maintained in accordance with good industry practice;
(viii) new requirement for the ASAs to provide monitoring equipment that is available at all times, and continuously monitors and transmits the reactive power being produced by the voltage support equipment to the designated interface points;
(ix) new requirement for the ASAs to ensure the black start equipment is able to start without power being obtained from the grid or local network at least once every six weeks unless the black start equipment has been generating for 66% or more of the time since the last test;
(x) new requirement that the system operator may require the ASAs to conduct a baseline test
of the black start service no more than
once during the procurement plan period to confirm the ASAs can meet the performance requirements;
(xi) new requirement for the ASAs to ensure the black start equipment is able to achieve
the response times specified in the ASPC; and
(xii) new requirement for the ASAs to ensure
the black start equipment is maintained in accordance with good industry practice.
(f) Changes to the offer period for the provision of voltage support, over frequency reserve, and black start provide the system operator with the ability to enter into new long-term contracts without limitation.
(g) Change to the pricing structure for voltage support drops the requirement for the system operator to purchase a mix of half-hour and long-term pricing.
(h) Change to the quantity requirements for voltage support drops the requirement for the system operator to use planning studies to justify the procurement of more voltage support.
A copy of the Commission’s recommendation and assessment is available, at no cost, on the Commission’s web site:
http://www.electricitycommission.govt.nz/rulesandregs/recommend
Dated at Wellington this 19th day of August 2005.
For and on behalf of the Electricity Commission:
ROY HEMMINGWAY, Chair.