MCY Mercury NZ ( MRP Mighty River Power)

[Harvey Specter]

I know how the spot market works - that is what Labour hates (everyone getting the margin cost of generation). Labour didn't say they would change this, they said they would replace it with a single user model where they set the price based on the original cost of plant.

In the end, I think this argument is wasted as I don't believe they will implement as they originally proposed. I believe it will be watered down considerably to be tweeks to the spot model. No facts to back this up but is the basis on which I continue to hold power companies.

[Vaygor1]

I know how the spot market works - that is what Labour hates (everyone getting the margin cost of generation). Labour didn't say they would change this, they said they would replace it with a single user model where they set the price based on the original cost of plant.

Where have they said this? I am not doubting you have seen it or think you have seen it. I would just like to know where.

In the end, I think this argument is wasted as I don't believe they will implement as they originally proposed. I believe it will be watered down considerably to be tweeks to the spot model. No facts to back this up but is the basis on which I continue to hold power companies.

I agree too except instead of being watered down, I think it will simply not achieve its objectives.

[Snoopy]

I provided you with this link. It is nothing but spin and presents untruths and assumptions as fact.

Labours NZ Power is policy Vaygor, supported by the Greens who may very well be in a position to see it implemented. There is no propaganda in there.

SNOOPY

[Snoopy]

Snoopy, please provide a link that explains the details if the bidding process and how a new buy/sell price is arrived at every 30 minute. In doing so, please explain how this mechanism will totally dictate the generators' sell price with NZ Power as one of the buyers.

Here is how it would all work Vaygor. Just don't tell the Labour team I leaked it. This is just a private little exchange between you and I, OK?

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Each generators individual power stations are allocated ‘call prices’ (using NZ Power predetermined fixed rate pricing) and minimum annual energy production targets (made up of smaller ‘call units’) under a Wholesale Information and Trading System (WITS). Individual power station profiles make up a total ‘NZ Power’ ‘national supply map’. If a particular generating plant does not meet a minimum energy generation target summed over a whole calendar year, then the owner of that generating plant will be fined. Discretion is allowed for hydro dams in years of drought: any shortfall can be carried over to be made up in higher rainfall years.

A ‘call unit’ can be summoned by NZ Power from any of the big five power generators for any future half-hour period (called a trading period). This ‘call’ is to generate a specified quantity at that time in return for an ‘NZ power’ prenominated price. More than one generator may be and is likely to be called upon for any one period. Each generator has three ‘rights of refusal’ per calendar month to turn down a call. If all power generators refuse individually for a particular period, then they will be commanded by NZ Power to supply the power on an equal share basis collectively. This clause will ensure some co-operation between rival power generators.

The System Operator ‘NZ Power’ (via Transpower) uses a scheduling, pricing and dispatch (SPD) system to rank ‘call units’, registered through WITS, in order of ‘deemed price’ and selects the lowest-cost combination of registered ‘call units’ to satisfy demand. The total domestic demand base case is set by using the five year average of all previous domestic demand plus 1%. Large energy users are added to this domestic demand profile. Large energy users must pre submit an ‘energy profile’ so that any large forecast spikes in demand can be planned for.

All ‘call units’ offered by a generator required to meet demand for a given half-hour are summed up and the weighted average cost sets the spot price for that trading period for all customers.

Electricity spot prices can vary significantly across trading periods. This reflects factors such as changing demand (e.g. lower prices in summer when demand is subdued, because only low cost energy is required to meet demand). Also changing supply (e.g. higher prices when hydro generation plants have already supplied their annual quota for the year and other more expensive power generation methods are substituted) will result in changing seasonal prices..

Spot prices can also vary significantly across locations, reflecting electrical losses and constraints on the transmission system (e.g. higher prices in locations further from generating stations).

Trade matching takes place at approximately 285 nodes (grid injection points and grid exit points) across New Zealand every half-hour. Generators are ordered to release ‘call units’ to supply electricity at 59 grid injection points (GIPs) at power stations. The call units will be requested by ‘NZ Power’ on the basis that total energy cost is minimized. Retailers and major users are then allocated the power at particular low price as calculated by NZ Power at each of the 226 grid exit points (GXPs) on the national grid.

Final prices at each node, taking account of grid losses and constraints, are processed and are confirmed the following day.

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SNOOPY

PS Aw heck sent it to the forum instead of as PM to you Vaygor! Don't tell anyone else about this will you?

[Vaygor1]

Labours NZ Power is policy Vaygor, supported by the Greens who may very well be in a position to see it implemented. There is no propaganda in there.

SNOOPY

The article to which you refer http://www.labour.org.nz/nz-power is not policy. It is spin; it is the normal one-eyed biased approach that any political party comes out with to besmirch their competitors. Policy is generally a few sentences of carefully worded official (signed) high level principals. I trust Labour has that somewhere. I haven't seen it, but what I am interested in is a lot more detail regarding the how.

[Vaygor1]

Here is how it would all work Vaygor. Just don't tell the Labour team I leaked it. This is just a private little exchange between you and I, OK?

-----

Each generators individual power stations are allocated ‘call prices’ (using NZ Power predetermined fixed rate pricing) and minimum annual energy production targets (made up of smaller ‘call units’) under a Wholesale Information and Trading System (WITS). Individual power station profiles make up a total ‘NZ Power’ ‘national supply map’. If a particular generating plant does not meet a minimum energy generation target summed over a whole calendar year, then the owner of that generating plant will be fined. Discretion is allowed for hydro dams in years of drought: any shortfall can be carried over to be made up in higher rainfall years.

A ‘call unit’ can be summoned by NZ Power from any of the big five power generators for any future half-hour period (called a trading period). This ‘call’ is to generate a specified quantity at that time in return for an ‘NZ power’ prenominated price. More than one generator may be and is likely to be called upon for any one period. Each generator has three ‘rights of refusal’ per calendar month to turn down a call. If all power generators refuse individually for a particular period, then they will be commanded by NZ Power to supply the power on an equal share basis collectively. This clause will ensure some co-operation between rival power generators.

The System Operator ‘NZ Power’ (via Transpower) uses a scheduling, pricing and dispatch (SPD) system to rank ‘call units’, registered through WITS, in order of ‘deemed price’ and selects the lowest-cost combination of registered ‘call units’ to satisfy demand. The total domestic demand base case is set by using the five year average of all previous domestic demand plus 1%. Large energy users are added to this domestic demand profile. Large energy users must pre submit an ‘energy profile’ so that any large forecast spikes in demand can be planned for.

All ‘call units’ offered by a generator required to meet demand for a given half-hour are summed up and the weighted average cost sets the spot price for that trading period for all customers.

Electricity spot prices can vary significantly across trading periods. This reflects factors such as changing demand (e.g. lower prices in summer when demand is subdued, because only low cost energy is required to meet demand). Also changing supply (e.g. higher prices when hydro generation plants have already supplied their annual quota for the year and other more expensive power generation methods are substituted) will result in changing seasonal prices..

Spot prices can also vary significantly across locations, reflecting electrical losses and constraints on the transmission system (e.g. higher prices in locations further from generating stations).

Trade matching takes place at approximately 285 nodes (grid injection points and grid exit points) across New Zealand every half-hour. Generators are ordered to release ‘call units’ to supply electricity at 59 grid injection points (GIPs) at power stations. The call units will be requested by ‘NZ Power’ on the basis that total energy cost is minimized. Retailers and major users are then allocated the power at particular low price as calculated by NZ Power at each of the 226 grid exit points (GXPs) on the national grid.

Final prices at each node, taking account of grid losses and constraints, are processed and are confirmed the following day.

----

SNOOPY

PS Aw heck sent it to the forum instead of as PM to you Vaygor! Don't tell anyone else about this will you?

Thanks Snoopy and I love the cynical secret slant you styled your post in.
I am after the methodology though and how this 1/2 hour pricing algorithm and bidding process works between sellers and buyers to arrive at the buy and sell price for each 1/2 hour period. Both now, and with the introduction of NZ Power in the loop. For instance on opening the ASX each day, the system works is explained in https://web.archive.org/web/20130127...ose-prices.htm
A 'call unit' whatever that it is for a future 1/2 hour period can be turned down only 3 times a month? The number of 1/2 hour periods per month is approx 1440. Why bother allowing any of them to be turned down at all?
"Discretion is allowed for hydro dams in years of drought" is vague and grey.
Who decides and dictates the seasonal pricing variation?
I could go on but what you have presented above is ill defined and I believe fatally flawed. Can you please provide the source of it so I can gauge the credibility of where the info came from. I have yet to see any official credible information regarding NZ Power dictating a sell price. Can you please direct me to something?.. Anything?

[Daytr]

A much better turn out for the referendum than I certainly anticipated. The government has been sent a resounding NO! Key better start listening to the electorate or he is going to be turfed out at the next election. There is no way they should raced to float these with this sort of uncertainty surrounding them. They have now damaged NZ's reputation for investment as it is likely these sales will be reversed. They thought they had a mandate to do this, clearly they didn't! http://www.nzherald.co.nz/nz/news/ar...ectid=11172228

[Snoopy]

Thanks Snoopy and I love the cynical secret slant you styled your post in.
I am after the methodology though and how this 1/2 hour pricing algorithm and bidding process works between sellers and buyers to arrive at the buy and sell price for each 1/2 hour period. Both now, and with the introduction of NZ Power in the loop. For instance on opening the ASX each day, the system works is explained in https://web.archive.org/web/20130127...ose-prices.htm

Vaygor, your comparative ASX example is made subject to the assumption the generators can negotiate the price at which they sell their power generated to NZ Power. Price is no longer negotiable in this single buyer model. Price is predetermined at the start of the seasonal selling period for each power station. Under the single buyer model, only volume of power generated is negotiable. And even that is subject to an annual overall target volume.

A 'call unit' whatever that it is for a future 1/2 hour period can be turned down only 3 times a month? The number of 1/2 hour periods per month is approx 1440. Why bother allowing any of them to be turned down at all?

I agree you might have to tweak the system a bit. If a 'call unit' is turned down by the generator because of sudden unexpected failure, for example, you could hardly expect that to be fixed in just half an hour. So a call unit could perhaps be rolled over for a period of say 3 continuous months, until the faulty part was fixed. All that would still count as a single 'call rejection'.

Only allowing three turn downs a month is low, yes. But this is to encourage seamless system use. Allowing no 'call unit rejections' at all would be going too far the other way.

"Discretion is allowed for hydro dams in years of drought" is vague and grey.

Drawing the line between what is a drought and what is vague and grey. The drought rules have to reflect this reality

Who decides and dictates the seasonal pricing variation?

Base case seasonal price variation will be based on historical records averaged over the last five years, from the current bid ask system.

I could go on but what you have presented above is ill defined and I believe fatally flawed. Can you please provide the source of it so I can gauge the credibility of where the info came from. I have yet to see any official credible information regarding NZ Power dictating a sell price. Can you please direct me to something?.. Anything?

Vaygor, you know I would never give away my source. The journalistic ethic would not allow it.

SNOOPY

[Vaygor1]

Vaygor, your comparative ASX example is made subject to the assumption the generators can negotiate the price at which they sell their power generated to NZ Power. Price is no longer negotiable in this single buyer model. Price is predetermined at the start of the seasonal selling period for each power station. Under the single buyer model, only volume of power generated is negotiable. And even that is subject to an annual overall target volume.



I agree you might have to tweak the system a bit. If a 'call unit' is turned down by the generator because of sudden unexpected failure, for example, you could hardly expect that to be fixed in just half an hour. So a call unit could perhaps be rolled over for a period of say 3 continuous months, until the faulty part was fixed. All that would still count as a single 'call rejection'.

Only allowing three turn downs a month is low, yes. But this is to encourage seamless system use. Allowing no 'call unit rejections' at all would be going too far the other way.



Drawing the line between what is a drought and what is vague and grey. The drought rules have to reflect this reality



Base case seasonal price variation will be based on historical records averaged over the last five years, from the current bid ask system.



Vaygor, you know I would never give away my source. The journalistic ethic would not allow it.

SNOOPY

Without quoting the above source, I can't gauge the credibility of its originator, and it follows that I cannot therefore gauge the credibility of the content.

This article http://www.3news.co.nz/Labours-power...4/Default.aspx published in mid April is on the mark. In the article, David Shearer is quoted as saying "I'm not going to talk about the policy at all...I'm not going to give an explanation of the policy. We are working...according to our own timetable."

and I have not seen a shred of clarification from Labour since on how they might do this. Until they come out with something, Labour's 'policy' cannot be deemed to be any more than empty political posturing.

Given the variables of weather, seasons, demand, outages, and growth, dictating electricity grid injection prices by way of any mechanism other than natural competition and supply-demand forces utterly defies logic... well, unless we resort (by definition) to a dictatorship/communist regime.

A wealth of information and data on the existing system and set-up can be found at http://www.electricityinfo.co.nz/comitFta/ftaPage.main
This link should provide some insight into the complexities of the issues and what is currently involved. On top of this the site says it is only a subset of WITS (Wholesale Information and Trading System) and that it only provides a "small taste of what is available to our subscribing WITS clients".

Further to this, WITS is only one segment under the Electricity Authority. Refer https://www.ea.govt.nz/about-us/ which is another good source of information about the structure of Nw Zealand's electricity industry.

When I think about the Labour/Greens sitting around trying to reach agreement with each other and nut this 'policy' out in the event they are voted in, I laugh so hard as to nearly wet myself.

[Snoopy]

Without quoting the above source, I can't gauge the credibility of its originator, and it follows that I cannot therefore gauge the credibility of the content.

Translation: I don't like the message even though I can't see anything obviously wrong with it. Therefore please provide me the name of the messenger that I don't like so that I can shoot him.

SNOOPY