NZX has been informed that the Electricity Commission has received its submission and will consider it. However, NZX understands that the Electricity Commission is currently negotiating with the incumbent provider and is yet to determine whether the process is contestable.
NZX supports the Commission's desire to increase the efficiency, flexibility and cost effectiveness of New Zealand's electricity market and believes that there is scope for significant improvement.
In support of these goals, NZX has presented to the Electricity Commission a solution that it considers presents a significant technological advancement on the current market platform at a substantially lower cost. In addition, the NZX proposal provides for future critical market structure development at the outset, including facilities for hedging and other value added services that will encourage further market efficiencies.
NZX sees the electricity market as a strategic national asset with huge scope for development in terms of process efficiencies, transparency and cost savings. NZX firmly believes it is well placed to deliver on all of these dimensions and is confident that the experience and expertise in the capital markets would enable NZX to provide the Electricity Commission with a flexible, scaleable and proven model given the opportunity to be part of a competitive process.
Potential benefits of the NZX proposal to the electricity industry and market participants include:
- An estimated $1 million in savings every quarter, which can be redirected back to consumers and market participants;
- A modern technology platform that meets new Government regulations and positions the market for future development;
- A better regulatory capability with proven ability to deliver unique solutions that work for New Zealand;
- Open architecture and free information to supply and demand side participants; and
- A tangible and credible road map for developing hedge markets.
