market operator service provider essentials

Market operator service provideressentialsVersion 1.0

1

What you need to know to work with WITS,

the pricing manager, the clearing manager

and the reconciliation manager

Introduction

• This presentation provides a basic overview of the following service provider roles:

- Pricing manager

- WITS

- Clearing manager

- Reconciliation manager

• It is targeted at those new to the electricity industry

• NZX Energy offers industry training which provides a more in depth introduction to these

service provider roles

© Copyright NZX Ltd. 20162

Pricing Manager


What does the pricing manager do?

• The primary role of the pricing manager is to calculate financial binding prices for the

wholesale electricity market

• Prices are calculated using the system operator’s Scheduling, Pricing and Dispatch

(SPD) model. This is the same model used by the system operator to forecast prices and

dispatch generation

• Prices are calculated the day after trading for all grid exit points and grid injection points,

for every half hour trading period

• Prices are published on WITS

• The pricing manager also manages the pricing error claim process


• Final prices are the prices that

the clearing manager uses to

calculate amounts payable

from/to generators and

purchasers

• Final prices are not subject to

revision

• Prices are interim when no

provisional price situations have

been identified or all provisional

price situations have been

resolved

• Interim prices can be subject to

a pricing error claim and will

remain interim until the pricing

error claim is resolved

• Typically prices are provisional

where SPD input data has been

estimated, is incorrect, or

causes an “infeasibility”

• An infeasibility is where the

SPD model cannot be solved

for a price at one or more

locations on the grid

• The pricing manager notifies the

market of provisional price

situations on the day after

trading

• Prices can remain provisional

for multiple days before being

resolved with revised

information.


Provisional, interim and final prices

• Prices are published for the previous trading day, every day, either as provisional or

interim

• Provisional prices are published after 10am and before 12pm on business days and after

9am and before 10am on non-business days

• Interim prices are published after 9am and before 12pm if there are no provisional price

situations

• Final prices are published after 12pm the first business day following the publication of

interim prices if no pricing error claim has been lodged


Pricing manager deadlines

• Participants can lodge a pricing error claim against interim prices, if they believe prices

are incorrect

• Pricing error claim must as per Form 9 of Schedule 13.1 of the Code. We can provide

you with a template if required.

• Pricing error claims should be emailed to [email protected]

• Pricing error claims must be received by the pricing manager before 12pm on the first

business day following the publication of interim prices

• The pricing manager investigates the pricing error claim and provides a recommendation

to the Electricity Authority to either reject of uphold the pricing error claim

• If the pricing error claim is rejected then the pricing manager will publish interim prices

after notifying the market

• If the pricing error claim is upheld, then the pricing manager will recalculate prices (after

being provided with revised information) and publish these prices as interim

• Prices that are subject to a pricing error claim will remain as interim prices until a

resolution has been reached


Pricing error claims

WITS


• WITS is the wholesale information trading system, it:

- Allows participants to upload offers and bids for the wholesale electricity market

- Provides access to pricing information published by the system operator and pricing

manager. Besides prices, participants also view their forecast cleared generation,

HVDC flows, transmission constraints and SPD infeasibilities

- Provides access to the clearing manager portal. Participants use this portal to receive

invoices, statements and prudential information

• All non confidential market information is also available at

https://www2.electricityinfo.co.nz/

• Contact [email protected] or 0800 NZX energy


What is WITS?

https://www2.electricityinfo.co.nz/

mailto:[email protected]

• If you are a new market participant and wish to get access to WITS:

- Complete the WITS sign up form and email to the Authority at

[email protected]

- Complete the System of Use Agreement and send to [email protected]

- Contact [email protected] for these forms

• If your organisation already has access to WITS and you wish to add a new user:

- Email a request through to the WITS help desk with the user’s full name & email

address and read only or full trader access

- You can define different levels of access to WITS for different users.

• Besides the web browser WITS also supports automated access to information through

SFTP or web services.

• Get in contact with us if you need further help on the above


Getting access to WITS?




Reconciliation Manager


Overview


• The reconciliation manager is responsible for calculating the quantity of electricity

purchased and generated by each participant in the wholesale electricity market.

• Purchase and generation quantities are calculated for every trading period and grid

location on a monthly basis.

• Key inputs to this calculation include:

- Metered grid quantities

- Participant quantity submissions (referred to as “volume submissions”)

• As part of the calculation process the reconciliation manager will:

- Adjust volume submissions to account for electrical losses within a network

- Convert non-half hourly volume submissions provided on a monthly basis to a half

hourly basis. This is achieved using a ‘profile’ either provided by the participant or as

calculated by the reconciliation manager.

- Calculate unaccounted for electricity and apportion this to participants. Unaccounted

for electricity is where there is a difference between metered grid quantities and total

participant quantity submissions.

• The reconciliation process is complex. For more information contact [email protected].

Submitting volume information and receiving reconciliation reports


• Participants can send submission information and receive reconciliation reports through

the reconciliation web portal, SFTP or web services.

• Contact [email protected] to obtain an account and login details.

• The reconciliation web portal can be accessed at www.electricityreconciliation.co.nz

• The reconciliation web portal contains further explanatory information including a file

names and file formats documents and system user guide.

• Please get in contact with us if you which to use SFTP or web services.

• UAT sites are also available. We recommend that these are used prior to your first

submission.


http://www.electricityreconciliation.co.nz/

Key reconciliation dates


• Business day 4 (i.e. the 4th business day of the month), 4pm - Initial volume submissions

must be provided for the previous month. Participants must submit volume submissions

for all ICPs for which they are recorded as being responsible for in the registry.

• Business day 7, 12pm - Initial reconciled volumes for the previous month are published

by the reconciliation manager to participants and the clearing manager.

• Business day 14, 4pm - Wash-up submissions are due from participants to the

reconciliation manager. Wash-up submissions are provided by participants where they

have revised volume information (e.g. to correct for estimates). Wash-up submissions

are provided for 1, 3, 7 and 14 months prior to the current month. These are referred as

the R1, R3, R7 and R14 revisions.

• Last business day, 12pm – Wash-up reconciled volumes (R1,3,7,14) are published by

the reconciliation manager to participants and the clearing manager.

Clearing Manager


Overview

The clearing manager has the following key functions:

• Ensuring participants maintain the minimum amount of prudential security defined in the

Code. This includes calculating minimum prudential security amounts on a daily basis

and monitoring each participants security holdings

• Preparing invoices and statements for participant purchases and sales of electricity to the

wholesale electricity market. Invoices also cover ancillary services (as provided by the

system operator), and financial transmission rights (FTRs)

• Ensuring the orderly payment of invoices as required to settle the market


Prudential Security

• Prudential security is required so that the clearing manager can still pay generators in the

event that a purchaser is unable to settle their amounts due (i.e. they default).

• Prudential estimates are provided to participants on every business day. The estimate is

made up of an outstanding exposure (amounts already consumed or generated, though

not yet settled) and an exit period exposure (7 or 18 days of estimated purchases and

sales, for consumers directly connected to the national grid and retailers respectively).

• The clearing manager will provide participants with a prudential estimate for the current

day and forward prudential estimates for the next three business days.

• Participants are required to meet the lowest of all estimates for the current business day

by 1600 hours on that day. This includes the prudential estimate made for the current day

and previous forward prudential estimates made for the current business day

• The clearing manager can only accept cash to cover prudential security if there is a

specific security deed or deed of priority in place.

• Other forms of security include; letters of credit, bank guarantees and hedge settlement

agreements. Prepayments for electricity not yet consumed is another option for reducing

exposure.

• Participants can request a reduction/release of prudential cash if they have a sufficient

surplus of prudential security. This request must be emailed into the clearing manager

and will be processed within 24 hours of the request being made.


• Wash-up notifications are published on business day 5. Wash-up notifications detail

revisions to previous month’s invoices.

• Invoices and statements are published on business day 9. Tax invoices and pro-forma

invoices are provided for the participant in their capacity as a purchaser and as a

generator. Invoices will include any wash-up amounts. Statements detail amounts

payable to and from the clearing manager. Statements will take into account any pre-

payments made.

• These documents are accessed on the WITS clearing portal or electricityclearing.co.nz

• Further explanatory information on how to understand these documents is also available

on the WITS clearing manager portal home page.


Wash-up notifications, invoices and statements


Settlement Day

• Settlement day is the 20th of each month or the next business day

• Amounts payable to the clearing manager must be made in same day cleared funds and

must be in the clearing managers settlement account by 1300 hours. Please allow time

for ANZ to process your payment

• If your payment is late you will be in default. The clearing manager does not have any

discretion to exercise in this regard

• Participants can request prudential cash to be used to cover amounts payable by

notifying the clearing manager at least two days before settlement day

• The clearing manager will pay amounts payable to all participants by 1600 hours

• Participants can request the clearing manager to pay amounts payable into their

prudential cash trust account by notifying the clearing manager at least two days before

settlement day

• On settlement day the clearing manager will also publish buyer created tax invoices.

These are available on WITS and electricityclearing.co.nz. For access to these portals

contact [email protected].

Trading for the first time

Before you start buying or selling electricity on the wholesale electricity market, you must:

• Register as a participant with the Authority and have a 4 letter participant identifier

• Provide the clearing manager with completed NZX Energy new participant documents.

This includes banking and contact information. It also includes information to allow the

clearing manager to do a customer due diligence check, required under anti money

laundering legislation. Email [email protected] to request these documents.

• Provide the clearing manager with an estimate of purchase quantities by GXP. This will

allow the clearing manager to estimate the minimum amount of prudential security you

are required to post (see below)

• Let the clearing manager know in plenty of time before you intend to start trading. The

clearing manager will let you know how much prudential security you are required to post.

• Provide the clearing manager with sufficient prudential security ahead of trading. There

are a number of ways in which this can be done. Email [email protected] if you need further

information.

• If you wish to use cash to meet your prudential security requirements you will need to

provide the clearing manager with a specific security deed.


http://www.ea.govt.nz/operations/industry-participants/how-to-register-as-a-participant/



Contact details

• NZX energy physical address: 11 Cable Street, Wellington

• Email address and phone addresses:

- pricing manager: [email protected], +64 4 498 0028

- WITS: [email protected], 0800 NZX Energy, WITS

- reconciliation manager: [email protected], +64 (0) 4 498 0044

- clearing manager: [email protected], +64 4 495 2801






Useful Websites


WITS:

• Primary WITS – www.electricitywits.co.nz

• Secondary WITS – www.wlg.electricitywits.co.nz

Reconciliation manager:

• Primary Portal - www.electricityreconciliation.co.nz

• Secondary Portal - wlg.electricityreconciliation.co.nz

Clearing manager:

• Primary Portal - https://electricityclearing.co.nz

• Secondary Portal - https://wlg.electricityclearing.co.nz

http://www.electricitywits.co.nz/

http://www.wlg.electricitywits.co.nz/



https://electricityclearing.co.nz/

https://wlg.electricityclearing.co.nz/

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