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Electric Kiwi And Haast Energy Trading File Formal Complaint In Response To Electricity Market Failure

Electric Kiwi and Haast Energy Trading have filed a formal complaint to the EA asserting that an Undesirable Trading situation (or UTS) occurred in relation to Monday night’s blackouts. This complaint is a process within the electricity regulations that allows for formal allegations of market failure or manipulation to be investigated.

An undesirable trading situation in the electricity market is defined as ‘an extraordinary event which threatens, or may threaten confidence in, or the integrity of, the wholesale market that cannot be resolved under the Code’.

Electric Kiwi and Haast Energy Trading believe that the rolling blackouts on August 9th meets the definition and believe that both Genesis and Contact are in breach of the High Standard of Trading Conduct provisions of the Electricity Industry Participation Code.

The complaint claims that Genesis in particular appears to have been influenced by its vertically-integrated position. That is, as a supplier that both generates electricity and retails electricity to customers, they have ignored their responsibility to ensure adequate electricity supply.

“Genesis have defended their behaviour by claiming that they supplied enough for their own customers, they seem to lack an appreciation of their responsibility to the New Zealand public,” said Electric Kiwi CEO Luke Blincoe.

The complaint alleges that both Genesis and Contact withheld generation capacity in abuse of their market power.

Blincoe says “there is no doubt that confidence in the electricity market has been hugely damaged once again”.

"Genesis claim that they covered their own customer’s needs, and evidently, they feel they have no responsibility to other Kiwi families and businesses to keep the lights on. We simply don’t agree that is good enough. They were gifted these assets, and we’re confident that if the generators weren’t vertically integrated then we would stop seeing these issues.”

The UTS complaint requests that the EA stops the finalisation of prices for the periods concerned and reset prices as if those thermal plants were offered, otherwise a perverse outcome would occur in which generators are rewarded for withholding capacity.

As well as the short-term action on the pricing, Blincoe suggest structural reform is the answer.

“This is another clear demonstration that companies that both generate and retail electricity don’t have the right commercial incentives to act in the interests of New Zealanders. Twenty six years after the Bradford reforms it’s time to break up the generators for the benefit of Kiwi consumers. It’s bad enough consumers are paying through the eyeballs for electricity, now they have to face uncertainty of supply. It’s time for action.”

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