General Prudential Requirement for Participants in the NZ Wholesale Electricity Spot Market

On these pages you will find the relevant information used by the clearing manager for calculating the exit period prudential margin for the wholesale electricity spot market in accordance with the clearing manager's settlement and prudential security methodologies and with Schedule 14A.1 clause 10 of the Electricity Industry Participation (Settlement and Prudential Security) Code Amendment 2013 (due to come into force on 24 March 2015).

This information includes exit period base prices, the adjustment factors used and the adder.

The exit period base price is made up of:

  • Futures price * location factor * monthly factor * day-type factor * trading period factor
  • The adder is then added onto this price before the exit period prudential margin is calculated

The exit period base prices, and the futures prices used to calculate them, are published at least two months before the quarter in which they will apply.

Factors and the adder are published before 1 November of the year preceding the calendar year in which they will be applied.

As envisaged in methodology 3 of the clearing manager's settlement and prudential security methodologies, the clearing manager's aim is to publish as much information as possible for industry participants to show how the adder has been calculated. The futures prices used are ASX futures. Due to contractual restrictions imposed by ASX, the clearing manager cannot republish the actual ASX prices used. However the information displayed does enable an interested party to identify from which periods the ASX prices have been used.


Adder

The adder is an amount in $/MWh which is added to the base price. The adder is the clearing manager's term for the amount that is determined in accordance with the Electricity Industry Participation (Settlement and Prudential) Code Amendment Schedule 14A1 clause 10(2)(c)(ii).


ASX Prices

These are the base prices for each quarter in the North and South Islands. This is represented as futuresPriceqtr,island in the methodology.Our calculations are based on ASX 24 End of Day Information. We have referenced the dates of the ASX prices used so that an interested party who obtains the ASX prices independently can identify which prices were used in the calculation. We are not authorized to provide the ASX prices directly.


Location Factors

These factors provide an adjustment between the future's reference node in the relevant island, and the node at which electricity is being bought or sold. This factor is represented as fn in the methodology.


Monthly Factors

These factors provide an adjustment for each of the months within a quarter. This is represented as fm,island in the methodology.


Quarterly Factors

These day-type factors provide an adjustment for business/non business day and apply for a quarter. This factor is represented as fftype,qtr,island in the methodology.


TP Factors

These trading period (TP) factors provide an adjustment for each trading period and are provided for business, and non business days. They apply for a quarter and are represented in the methodology as ftp,dtype,qtr,island



The clearing manager is a market operation service provider under the Electricity Industry Act 2010. NZX is contracted to the Electricity Authority to provide the clearing manager market services.

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