Inefficient Price Discrimination in very large contracts
Last updated: October 31, 2022Energy
Inefficient Price Discrimination in very large contracts
Published: October 31, 2022
Submitting To: Electricity Authority
Issue for Business: In August 2021, the Electricity Authority (EA), in conjunction with their review into the wholesale market, released a paper on the possibility of Inefficient Price Discrimination within very large contracts of electricity, in particular, contracts with 150MW>. The EA believed contracts like Tiwai resulted in higher bills for consumers. BEC submitted that there remains insufficient evidence to prove this claim. The EA announced intervention in August this year, with a proposal to amend the code.
Action: BEC responded to this proposed code amendment in opposition for four reasons. Firstly, it would likely create uncertainty and regulatory risk, hurting investor sentiment in New Zealand (an extra barrier to investment in matters like hydrogen) . Secondly, the proposal was overly and unnecessarily intrusive, especially clause 13.271, which allows the EA to request ANY information. Thirdly, the proposal limits contractural freedom. Lastly, there remains insufficient evidence to prove generators sell below cost.
Outcome: Awaiting the Authority's decision
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