Hedge Market Development Project
September 2004 - late 2006
Electricity hedge
market
This
is the market for instruments that help market participants
to manage risks associated with spot and locational (basis)
pricing risks
Objectives
Established by the Electricity
Commission, the project's terms
of reference require a group of senior executives and
consumer representatives to explore issues and options,
and if possible reach an agreement, on how to improve the
hedge market in a manner that meets the requirements of
market participants, the Electricity Commission(EC), the
Government, and various interest groups.
My
input
As chairperson,
I contribute to the group by:
Providing a strategy and approach
to achieve the objective
Helping to find a common framework
Developing a chemistry of intellectual
openness and rigour
Bringing in a range of outside
expert views
Distilling common ground on robust
options
Facilitating group presentations
to the EC Board
Liaising closely with the secretariat
and the EC's senior adviser
Group membership
The group's membership
comprises:
Tony Baldwin (Chair),
Consultant
Carl Daucher, formerly
GM, Strategy + Development, NZ Stock Exchange (retired
from Hedge Group in late 2006)
James Moulder, GM
Sales, Mighty River Power
Mark Trigg, GM Trading,
Contact Energy
Paul McIver, formerly
Wholesale Trading Manager, Trustpower (retired from Hedge
Group in late 2006)
Ralph Matthes, Executive
Director, Major Electricity Users Group
Russell Longuet,
Independent energy consultant
Steve Barrett, former
CEO, Contact Energy (retired July 2005, replaced by Mark
Trigg)
Tim Street, Senior
Adviser, Electricity Commission
The Market Place Company provides
secretariat support
Key steps
Define scope and
nature of problems, including a survey of market participants
to better understand their needs and perceptions of the
contracts market
Take advice from
a range of experts
Define and analyse
change options
Agree on a preferred
package
Provide detailed
paper to EC, for consultation with industry
Group's main outputs
A range of internal papers
Presentations to EC board
Unanimous agreement among members
on a preferred package of changes
This package, and the accompanying analysis
of options, is outlined in a set of consultation
papers prepared for the Commission by the Group
Experts consulted
John Small,
Covec
Mike Thomas,
Charles River Association
Conrad Edwards,
Transpower
Jomar Eldoy,
M-co
Tim Grafton,
UMR
Graham Shuttleworth,
NERA
John Culy, Morrison
& Co
Simon Coates,
Contact
John Culy/Grant
Read, CRA
Brent Layton,
NZIER
Paul Quilkey,
Westpac
Nigel Williams, ANZ
Current situation
Industry parties made submissions
to the Commission in late 2006 on the Group’s preferred
package of changes. The submissions expressed a relatively
high level of agreement or endorsement.
In early 2007, after considering
submissions, the Electricity Commission approved the Group’s
preferred package and directed the Commission’s staff
to proceed with implementation as proposed by the Group.
