The NZX Energy is an index that provides special services to the New Zealand Stock Electricity Market. With the use of the state-of-the-art proprietary systems along with the first-hand expert knowledge about the electricity market, the NZX Energy offers services towards the pricing, trade as well as clearance of spot marker reconciliation in the energy market of the country.
There are different other activities that the NZX Energy is responsible for. These include billing of network services, expert analysis, data provision and offering different programs targeted on energy market design, as well as operations to a huge variety of audiences in both New Zealand and abroad.
What are different kinds of services offered by the NZX Energy?
The NZX Energy is responsible for several services. The Wholesale Electricity Market of the country is operated by the NZX, and it offers different systems and services to the people as the market regulator from the Electricity Authority. It has further been explained that these activities undertaken by the NZX are according to the guidelines of the Electricity Industry Participation Code from 2010.
Image Source: Copyright © 2021 Kalkine Media
What is WITS?
Known as the Wholesale Information and Trading System, WITS is a trading and operations system used by the NZX for managing the daily transactions of the spot market electricity. It’s responsible for over 25,000 market orders in a day for publishing important information such as nodal prices, dispatch schedules, constraints in transmission and so on.
How does the NZX act as the reconciliation manager?
With the NZX undertaking the responsibility for the allocation of electricity in different quantities to different purchasers as well as generators, it keeps a track of what goes where. There is the use of information from various market participants for the allocation, scaling and calculation of electricity that is unaccounted for. This in turn helps in the market settlement for monthly allocations.
How does the NZX act as the pricing manager?
On a regular basis, there is a calculation of half-hour energy as well as the settlement prices of the reserve market by the NZX. This is done for about 270 different locations. Besides this, the prices are also used for a variety of areas like scenario forecasting for price as well as deriving the contract valuation. The prices are then published on WITS.
How does the NZX assist in stress testing?
Operating independently, the NZX is responsible for the management of the collection of stress test and reporting it further. There is a code followed by various participants in the electricity market, whether you are a purchaser making deals with the clearing manager, or a consumer who’s connected to the grid directly. You are required to offer the “SPOT Price Risk Disclosure Statement” within 5 days from when a new quarter begins. This statement contains details of its market spot price risk extent or exposure.
What kind of Data services does the NZX Energy offer?
They offer data and reporting services for various market observers and industrial participants. These many include nodal prices for half hour. They can usually customise supply and demand according to the specific needs of the users. Offered in the Daily Electricity Report, are key metrics of the electricity market, covering different aspects like transmission, supply, demand, price, and climate. Besides this, there is a Daily Hydrological Summary report, which is laid out on the basis of the ongoing as well as historic patterns of New Zealand’s hydrology trends in various generation catchments. This can be accessed daily, or one can get access to the entire database, which is 90 years old, by choosing that particular subscription.
How does the NZX act as the clearing manager?
The wholesale market is governed by the clearing as well as settlement of arrangements made by the NZX. The job of the clearing manager is to decide and manage clearances for the wholesale market. The clearing manager is further responsible for the settlement of all the trading done in a month besides market for the financial transmission rights.
There is accurate monitoring of the risk exposure in the participants of the market in relation to spot market in order to make sure that they are adept in offering prudential security and be able to meet the obligations and norms of the market. In case the lodged security is found to be less than the next exposure, there will be additional security needed.
Amongst other functions of the Clearing Manager, lie activities such as the settlement of hedge agreements, calculations, and invoices in case of ancillary services transmission.
What is MOSP?
MOSP is better known as Market Operator Service Provider Enhancement Programme. When the NZX was chosen by the Electricity Authority, it was required to fulfil different MOSP roles as per the Electricity Industry Participation Code. These roles are essentially of a Reconciliation Manager, Clearing Manger, Pricing Manager and WITS Manager. According to the upgrade and additions done to this dynamic since 2015 to 2018, there are several benefits that the program has received.
Some of these benefits are increased security, and improvement in the accessibility of the data, reduction in the complexity of the data as well as making the operations and processes more efficient.
How did the NZX reach this enhancement in 2016?
To reach this stage, the NZX made efforts such as face-to-face visits, releasing monthly updates on energy usage, phone calls and emails, group meeting for users and so on, to work on enhancing the capabilities of the entire process.
Which are some of the top electricity providers in the country?
Though there are different companies offering home and industrial electricity services, some of the leaders in New Zealand are (NZX:MEL) Meridian Energy Limited, Mercury NZ Limited (NZX:MCY) and Genesis Energy Limited (NZX:GNE)