Pricing guidelines for electricity distributors. A handbook for pricing practitioners

Pricing guidelines for electricity distributors A handbook for pricing practitioners November 2016

Contents Foreword 5 1 Introduction 6 2 Connection Groups 9 3 Residential Group 12 3.1 Low Fixed Charge Group 14 3.2 Volume kwh charges 18 4 General Connection Group 27 5 Temporary Supply 32 6 Unmetered Load 34 7 Large Commercial 41 8 Irrigation 52 9 Power Factor 56 10 Seasonal Pricing 60 11 Documentation & Terminology 62 11.1 Published documentation 63 11.2 Pricing Schedules 66 12 Billing format & processes 71 13 Appendix 78 Appendix 1: Terminology for Street lighting 79 Appendix 2: Distribution Price Categories (<150 kva) 80 Appendix 3: Distribution Price Categories (>150 kva) 81 Appendix 4: Example Power Factor Calculations 82 Appendix 5: Metering Installations Characteristics 84 2

Version Control Version Date of Publication Scope of Document 1.1 September 2015 Version one of the ENA Pricing Guidelines covered the following topics: Definitions of small capacity consumer groups, including Residential and General (metering categories 1 and 2 in the Code commonly referred to as mass market consumers) A definition for temporary supply Definitions of common pricing plan components including Uncontrolled, Controlled, Night Only, Night Boost, All Inclusive, Day and Night Definition of Summer and Winter periods Outlined standardised approaches to pricing documentation, terminology, schedules and billing. 2.0 September 2016 Version two of the Pricing Guidelines reflects some minor changes based on feedback received, and extends the scope to also include: Large Commercial pricing structures Irrigation Unmetered load Power factor. 3

Glossary and Abbreviations Advanced Meter Connection Controlled Meter Distributor Electricity Industry Act 2010 (Act) Electricity Industry Participation Code (Code) Electricity Information Exchange Protocol (EIEP) Electricity Networks Association (ENA) Information Disclosure (ID) Input Methodology (IM) Installation Control Point (ICP) Kilowatt hour (kwh) Legacy meter Also called a smart meter. Is a meter with the ability to measure energy use at various time intervals and with operational two-way remote communications capability. Installed at a Category 1 or 2 metering installation point ( 500Amps). A point of connection to an electricity distribution network as identified by an Installation Control Point (ICP) identifier. A meter that measures load where there is functionality to control the energy provided to permanently wired appliances (e.g. a hot water cylinder) that are connected to the meter. A company that owns or operates the power lines that transport electricity on local networks. Terms also used are distribution company, lines company and network company. An Act that regulates the operation of the New Zealand electricity industry. The Code sets out the duties and responsibilities that apply to industry participants and the Electricity Authority. EIEPs provide a set of standardised formats for business-to-business information exchanges. Association of all 29 New Zealand electricity distributors. Electricity Distribution Information Disclosure Determination 2012. Electricity Distribution Services Input Methodologies Determination 2012. See Connection. kilowatt hour is also known as a unit of electricity and is the basis of retail sales and reconciliation of electricity in the market. A meter that measures cumulative energy consumption (kwh) and does not have remote communications capability. Installed at a Category 2 ICP or lower ( 500Amps). Low Fixed Charge Regulations (LFC Regulations) Loss Factor Low Fixed Charge (LFC) Lower South region Meter Categories (1, 2, 3, 4, and 5) Meter register Peak Load Pricing Principles Registry ToU Meter Transmission Transmission network Uncontrolled Meter Unaccounted for Energy (UFE) Electricity (Low Fixed Charge Tariff Option for Domestic Consumers) Regulations 2004. Loss factors are declared by distributors and used to reflect the normal difference between energy injected into a network and energy delivered from the network in the reconciliation process. Low Fixed Charge. Stipulated in the LFC regulations as consumers supplied by the Arthur s Pass, Castle Hill, Papanui, and Hororata grid exit points, or any grid exit point that is located further south. Defined in the Schedule 10.1 of the Code. See Appendix 6. An energy measurement device on a meter. Peak half hourly demand, measured in kw or kva. The distribution pricing principles as published by the Electricity Commission in March 2010, adopted by the Electricity Authority. The registry is a national database that contains information on every point of connection on local and embedded networks to which a consumer or embedded generator is connected. Category 3, 4, or 5 metering installation capable of recording kwh and at least one of kvarh and kvah on a half-hourly basis Conveyance of electricity at high voltages through the Transmission network. New Zealand s national transmission network (national grid) owned by Transpower New Zealand Limited. A meter that measures load where there is no load control functionality. The difference between reported energy injected into a network and the reported energy extracted from the network after it has been adjusted using Loss Factors. The Electricity Authority also publishes a glossary of key industry terms on its website. 4

Foreword These standardisation guidelines have been prepared to help distributors align their pricing methods and definitions. Though the guidelines are written primarily for the pricing practitioners of distributors and electricity retailers, their over-riding goal is to improve outcomes for large and small consumers. Standardisation reduces the complexity and number of pricing arrangements between distributors and retailers, which lowers operating costs and barriers to more retail competition, benefitting consumers in the long term. Version one, published in 2015, focused on pricing structures and terminology used for residential consumers. This version two extends the guidelines to include pricing structures for larger commercial customers. Work on standardisation followed feedback on an Electricity Networks Association distribution pricing consultation paper issued in May 2015. We listened to stakeholders who recommended a reduction in variance of pricing approaches across New Zealand s 29 lines companies. They expressed a view that there were benefits in stable and standardised prices which were clear and simple. The guidelines are an important part of a customer-focussed work programme by ENA members. In addition to standardisation, members are also looking at fundamental pricing reforms. Both work streams are important short and long term steps toward pricing which is less complex and which ultimately reduces costs in the provision of a reliable, safe, and efficient electricity network. Finally, these guidelines are only effective if they are followed by ENA members. We would strongly encourage all distribution companies to work toward adopting the guidelines in their next and future pricing changes. Ken Sutherland Chair, Electricity Networks Association 5

1. Introduction 6

1. Introduction Purpose and Scope This document sets out the Electricity Networks Association s (ENA) guidelines for the definition, format and structure of electricity delivery pricing (the Guidelines). The initial audience of these guidelines is the pricing practitioners of electricity distribution businesses, or distributors. However it is also anticipated that the Guidelines will be helpful to electricity retailers. These guidelines will help distributors describe and present their prices in a clear and consistent manner for use by retailers, particularly those that operate across multiple network areas. The Guidelines may also assist consumers enquiring about the delivery charges that apply to them. This is the second version of pricing guidelines for electricity distributors. The first version was published in September 2015 and included: Definitions of low capacity consumer groups, including Residential, Low Fixed Charge and General groups that generally fall within metering categories 1 and 2 in the Code (sometimes called mass market consumers) A definition for temporary supply Definitions of common pricing plan components including Uncontrolled, Controlled, Night Only, Night Boost, All Inclusive, Day and Night, Summer and Winter Standardised approaches to pricing documentation, terminology, schedules and billing. This second version reflects some minor changes based on feedback received, and extends the scope to also include: Large Commercial pricing structures Irrigation Unmetered load Power factor kwh charges for imported energy for small scale distributed generation. In some areas the rationale for recommending a particular approach has been included as it may be useful and assist a distributor to align with the Guidelines. The Guidelines may be reviewed and updated where there are opportunities to achieve more consistent approaches to pricing. Introduction 7

Use of These Guidelines These Guidelines represent the ENA s view of pricing definitions and formats that can be considered by distributors when reviewing their pricing methodologies and schedules. The document includes consumer and technical definitions where relevant. Consumer definitions are targeted towards those who may have limited knowledge of the electricity sector. Technical definitions provide further supporting information on how the definitions are to be applied. The Guidelines present either a single proposed approach or, in some cases, a list of suggested options. While it is the ENA s expectation that distributors will ensure their pricing materially aligns with these Guidelines, it is acknowledged that distributors may adopt different approaches. In this respect, the ENA suggests that distributors explain the reasons for their alternative approach in their pricing methodologies. These guidelines are not a substitute for consultation processes. Distributors are required to consult with retailers in accordance with their Use of System agreements and the Code prior to implementing any changes to pricing structures. 8

2. Connection Groups 9

2. Connection Groups The main pricing groups are Residential, (including Low Fixed Charge plans), General, Large Commercial, and Individually Priced connections. Distributors also use a range of specialty pricing groups such as Irrigation, Unmetered Connections and Temporary Supplies. Where there are specialty pricing groups, distributors have specific pricing plans for these type of connections. Figure 1 below illustrates the consumer pricing groups commonly used by Distributors. Figure 1. Connection Types and Pricing Groups CAPACITY MAIN GROUPS SPECIALITY GROUPS END USE LOW When no differentiation is made between residential and non-residential customers all mass market customers form part of the General group. Residential Distributor Pricing Groups General Large Commercial Individually Priced Irrigation Unmetered Temp Supply Residential HIGH Commercial The following sections define consumer pricing groups and outline the pricing structures in common use for each group. In some areas these guidelines are only applicable for distributors using ICP-based rather than GXP-based pricing. The terms mass market and time-of-use (TOU) are often used, for pricing purposes, to define groups of consumers. The distinction is made because the data from a half-hour interval TOU meter supports more sophisticated pricing approaches than the fixed, $/day, plus volume, ($/kwh), charges generally applied to mass market consumers. These Guidelines avoid the terms mass market and time of use where possible as they have different meanings for different participants, and do not provide a clear distinction for pricing purposes. The definition of consumer segments labelled mass market and TOU may not be as clear and distinct today as in the past. This is due to the prevalence of half-hourly reconcilable advanced meters installed in the traditional mass market segment. 10

3. Residential Group 11

3. Residential Group The rationale for adopting a Residential pricing group, defined by end use, is that these consumers often have similar required capacity, a relatively common load profile and, if electricity is used for water heating, then load is often controllable by the distributor.1 The terms domestic consumer and domestic premises are defined in section 5 of the Electricity Industry Act 2010 (the Act). However, the term Residential is commonly used by providers of utility services and understood by electricity consumers. Therefore the recommended approach is to adopt the term Residential with a definition consistent with the statutory definition of Domestic in section 5 of the Act. Figure 2. Definitions of domestic consumer and premises - s5 Electricity Industry Act Electricity Industry Act 2010 (5) Interpretation In this Act, unless the context otherwise requires, domestic consumer means a person who purchases or uses electricity in respect of domestic premises domestic premises means premises that are used or intended for occupation by a person principally as a place of residence; but does not include premises that constitute any part of premises described in section 5(c) to (k) of the Residential Tenancies Act 1986 (which refers to places such as jails, hospitals, hostels, hotels, and other places providing temporary accommodation). The group of residential consumers entitled to a Low Fixed Charge (LFC) pricing plan is discussed below. This is often a sub-group of a residential connection group. Consumer definition A residential connection is where the consumer s connection is for a private dwelling (intended for occupation principally as a place of residence). Technical definition and context A residential connection is where electricity is supplied to a premises that is used or intended for occupation by a person principally as a place of residence. It does not include premises that constitute any part of premises described in section 5(c) to (k) of the Residential Tenancies Act 1986 (which refers to places such as jails, hospitals, hostels, hotels, and other places providing temporary accommodation). 1 Distributors usually offer a range of control options and some distributors also mandate that storage water heaters have to be connected to the network via a controlled circuit. 12

Common issues with classifying residential connections A situation where an occupant works from their home The boundaries between business and residential activity appear to be increasingly difficult to define. For example, a Bed and Breakfast operation would not meet the standard definition of a residential connection. However it would be less clear if a resident occasionally advertised a room in their home on, say, Airbnb. If an occupant of the residence works from their home which is a residential connection and the usage pattern and capacity requirements are not impacted by the activity, then the standard approach would be for the distributor to classify the connection as residential. Other subgroupings Some distributors define subgroups within the residential category (e.g. high and low cost geographic areas, a holiday home category, controlled/uncontrolled categories and high capacity residential category). These distinctions are outside of the standard approach set out in these guidelines and therefore an explanation should be included in the distributor s pricing methodology disclosure. Residential connections that require higher-than-normal capacity Some distributors define a capacity threshold above which a connection will not be eligible for a residential pricing plan. The Low Fixed Charge Regulations require all qualifying residential consumers to have a low fixed charge option, even those with higher-than-normal capacity requirements. Water pumps or other ancillary facilities that are a separate ICP but support a residential connection In rural areas, a water pump or other ancillary connection may service a residential connection. If a separate ICP, the connection does not meet the definition of a residential connection outlined above. The standard approach would be for a distributor to not classify the ancillary ICP as a residential connection. Small scale community facilities Some distributors may provide exceptions to eligibility, based on the end-use of small-scale community facilities, such as halls used infrequently by community groups. The standard approach is for distributors to not classify these installations as residential connections. These types of connections clearly do not meet the eligibility criteria for an LFC pricing plan as set out in the LFC Regulations. Residential Group 13

3.1 Low Fixed Charge Group The Electricity (Low Fixed Charge Tariff Option for Domestic Consumers) Regulations 2004, (LFC Regulations), require distributors to offer a low fixed charge pricing option to qualifying residential consumers. The fixed price component must be $0.15 per day (excluding GST) or less. Distributors can comply with the requirements of the LFC Regulations by offering a Low Fixed Charge (LFC) compliant pricing option2 to only those consumers who are eligible, or by offering a LFC compliant pricing plan to a wider group of consumers. Different approaches create different considerations, such as: if a distributor offers a low fixed charge plan and a standard plan, then the number of pricing plans offered and maintained increases if a distributor offers a low fixed charge plan to all residential, or an even wider group of consumers, then their pricing is likely to be less cost reflective. The figures below outline the main ways that distributors set up their pricing plans to meet the requirements of the LFC Regulations. Note the shaded box in each diagram must be a low fixed charge plan. Figure 3. Dual Residential Plan A separate Residential LFC pricing plan is offered to qualifying residential consumers. Distributor Pricing Plans Residential Low Fixed Charge Residential Standard General Large Commercial Figure 3 illustrates where distributors offer a low fixed charge plan to a subset of residential consumers that meet the principal place of residence definition, and select a LFC plan through their retailer. This can be described as a dual residential plan structure. The Residential Low Fixed Charge plan will typically have a daily fixed charge of $0.15 per day and a higher variable, $/kwh, price than the Residential Standard plan. 2 A Low Fixed Charge compliant pricing plan is one where the fixed charge is no more than $0.15 per day, and if a Residential Standard plan is offered, total annual costs for the Low Fixed Charge plan need to be equivalent or less than the standard plan for a consumer using 9,000kWh per annum in the Lower South region, or a consumer using 8,000kWh in the rest of New Zealand. 14

Figure 4. Single Residential Plan All Residential connections are on a LFC pricing plan Distributor Pricing Plans Residential General Large Commercial Figure 4 illustrates the structure where distributors have one Residential pricing plan that is a low fixed charge plan. All residential connections are charged a fixed price component of $0.15 per day or less. A variation of the approach in Figure 4 above is to restrict the Residential plan to qualifying Residential consumers only, i.e. for consumers principal places of residence only. All other residential connections, (i.e. non principal place of residence), are charged based on the applicable general pricing plan. Figure 5. Single General Plan All General connections up to a capacity threshold, are on a LFC pricing plan Distributor Pricing Plans General Low Fixed Charge up to a capacity threshold General Large Commercial Some distributors extend a low fixed charge plan to a wider group of small capacity consumers, not just residential consumers. Figure 5 illustrates the approach where distributors offer a low fixed charge plan to a larger number of residential and nonresidential connections which are below a specified capacity threshold. Residential Group 15

Consumer definition A LFC pricing plan has a fixed charge of no more than $0.15 per day and is consistent with all the requirements of the LFC regulations. A LFC pricing plan must be available to consumers for their principal place of residence. A principal place of residence is considered to be the dwelling that is occupied as the consumer s primary residence and would therefore exclude a holiday home or an additional home that is infrequently occupied. Technical definition and context A distributor must offer a price category, (pricing plan), that complies with the LFC regulations, and a qualifying consumer that elects to be included in this group for their principal place of residence must be allowed to do so. Where a specific LFC price category is provided, the consumer will pay less on the LFC plan than they would on a standard plan, provided that their annual consumption is less than 9,000kWh in the Lower South region3, or less than 8,000kWh elsewhere in the country. The LFC Regulations do not set out a capacity limit above which a residential connection is ineligible for a LFC plan. Distributors are required to offer any qualifying residential connection a low fixed charge compliant plan regardless of their capacity, unless the distributor has an exemption. Labelling pricing plans A price plan need only be labelled as LFC if there is an alternative pricing plan available. For example, in Figure 4 above, the Residential plan has a LFC, and there is no alternative plan provided, therefore this price plan should be named Residential. Conversely in Figure 3, there is a choice of plans offered; a LFC residential plan or a standard residential plan. The plan/group names would need to distinguish between them by clearly labelling the differentiation between the plans. For example: Residential - Low Fixed Charge (LFC) Residential - Standard. 3 Lower South region includes consumers supplied by the Orion, Electricity Ashburton, Alpine Energy, Network Waitaki, Aurora Energy, OtagoNet, The Power Company, or Electricity Invercargill distribution networks. 16

Exemptions under the LFC Regulations There are provisions in the LFC Regulations, regulations 26 - s34 that outline the process and criteria for obtaining exemptions. With respect to capacity, regulation 29A provides for an exemption to be obtained in certain circumstances for connections that require higher than normal capacity to be provided by the distributor. Where a distributor holds an exemption pursuant to regulation 29A of the LFC Regulations, setting a capacity threshold of 15 kva for residential connections will simplify their pricing structures. There are also provisions in the LFC Regulations for exemptions to be granted in other circumstances. Regulation 28 provides for exemptions to be granted to distributors for remote areas with single lines serving few homes, and regulation 29 provides for exemptions to be granted to distributors for homes served by dedicated transformers. Figure 6. Exemption Provisions - Extract LFC Regulation 29 Electricity (Low Fixed Charge Tariff Option for Domestic Consumers) Regulations 2004 29A Exemption for distributors for homes with 3-phase supply or 15kVA supply One of the criteria according to which the Minister may exempt an electricity distributor from its obligations under these regulations in respect of the regulated distributor tariff option is that: - (a) the home is on a 3-phase supply, or a greater-than 15kVA supply, or on both; and (b) the distributor has an active programme of facilitating homes referred to in paragraph (a) to transfer to single phase supply, or to supply of 15kVA or less; and (c) in the opinion of the Minister, it would be a significant or unreasonable cost for the electricity distributor to make a low fixed charge tariff option available in respect of the home. Residential Group 17

3.2 Volume kwh charges Scope Outlined below are the recommended definitions for the volume (dollars per kwh) components of pricing plans that are commonly offered by distributors for small to medium capacity connections, generally within metering categories 1 and 2 as defined in the Code. These types of charges will likely apply to residential and small to medium commercial customers that make up the residential and/or general pricing groups. Distributors should ensure that appropriate Electricity Authority approved register content codes (or code groupings) are available for electricity retailers to apply to the volume price components offered. Distributors should look to align with existing register content codes before seeking approval for additional codes. Uncontrolled An Uncontrolled supply is where the distributor does not have any ability to control the connection s load on that particular meter register. Uncontrolled supplies are common in situations where consumers have two meters, with one meter used to measure uncontrolled usage and one meter used to measure controlled usage. The separate Controlled supply is typically used for appliances such as hot water cylinders. An Uncontrolled supply will also be provided where consumers use an alternative fuel, such as piped natural gas or bottled LPG, to heat their hot water. In this instance, the Uncontrolled supply is likely to be the only type of supply provided to the connection. Consumer definition An Uncontrolled supply is a metered supply that provides uninterrupted energy. It is commonly installed alongside a Controlled supply (for example, with the load control being applied to the hot water cylinder). Technical definition and context An Uncontrolled supply is a continuous supply on a single meter register applicable where there is no load that is controllable by the local distribution network on that register. he applicable Register Content Code is UN. 18

Figure 7. Uncontrolled supply (legacy meter setup) Network Supply Network Supply Uncontrolled Meter Controlled Meter OR Uncontrolled Meter Load Control Device All other Appliances Hot Water Cylinder All Electrical Appliances Controlled A Controlled supply is where the distributor has the ability to periodically interrupt the supply to a particular meter at an installation. The Controlled supply meter, or meter register, would be connected to the controlled circuit with separately wired appliances such as a hot water cylinder. The additional Uncontrolled supply meter, or meter register, will need to be used to supply the appliances on the uncontrolled circuit. The difference between Controlled supplies and the night plans (Night Boost and Night Only), is that the load control associated with a Controlled supply is not operated based on specific daily times. Night plans are discussed in more detail below. Consumer definition A Controlled supply is a separately metered supply that allows the local distributor to control energy to permanently wired appliances, such as hot water cylinders. Technical definition and context A Controlled supply is a supply via a single meter register connected to permanently wired appliances that meets the distributor s criteria for load control and where all load on that meter register can be controlled according to the distributor s peak load control timeframes or other requirements. Applicable Register Content codes are CN16, CN18, or CN20, depending on the distributor s load control timeframes. Residential Group 19

Figure 8. Controlled supply (legacy meter setup) Network Supply Controlled Meter Uncontrolled Meter Load Control Device Hot Water Cylinder All other Appliances Timing for Controlled Supply Peak load control is usually operated according to a set of service level targets (rather than a strict guarantee). There is a range of different timeframes used by distributors to control load. The recommended options are in the table below. Table 1. Load control timing option for controlled price plans Description Price Component Register Content Code Option 1 Supply provided for a minimum of 18 hours per day plus uncontrolled meter Controlled 18 + Uncontrolled CN18 + UN24 Option 2 Supply provided for a minimum of four hours in any eight hour period plus uncontrolled meter Controlled 16 + Uncontrolled CN16 + UN24 Option 3 Supply provided for a minimum of 20 hours per day plus uncontrolled meter Controlled 20 + Uncontrolled CN20 + UN24 Option 2 specifies both a maximum off time (4 hours) that a storage water heater must be sized to cater for, as well as a reheat period (4 hours) that the element needs to be sized for. The distributor has flexibility to control load during both the normal 20

residential morning and evening peaks and provide a 4 hour recovery/reheat period in between. The service level is described as 16 (rather than 12 hours), hours because in practice only two of the 4 hour blocks of load control are used each day. No peak load management happens between 11pm and 7am. Night Only Night Only is a variation of Controlled supply, in that the supply of energy is controlled by the distributor. However Night Only and Night Boost have specific daily operating times that turn the supply to those meters on and off. Consumer definition Night Only is a separately metered supply to permanently wired appliances, such as hot water cylinders or night store heaters, which are switched on at specific times during the night. Technical definition and context Night Only is a supply via a single meter register connected to permanently wired appliances that meet the distributor s criteria, where all load on that meter register is switched on for the distributor s defined night period. Applicable Register Content Code is, for example, CN8 turned on from 11pm to 7am each night. Figure 9. Night Only supply (legacy meter setup) Network Supply Night Only Meter Uncontrolled Meter Load Control Device Controlled Appliance All other Appliances Residential Group 21

Timing for Night Only supply For Night Only supply, the controlled load is typically turned on for a duration of eight hours, between 11:00pm and 7:00am, or ten hours between 9.00pm and 7.00am. Night Boost Night Boost is a variation of Controlled supply and Night Only supply. The supply of energy to the specific permanently wired appliance/s is controlled by the distributor similar to Night Only, with an additional boost period during the daytime. Consumer definition Night Boost is a separately metered supply to permanently wired appliances, such as hot water cylinders or night store heaters, which are switched on and off at specific times. Night Boost supply will be switched on during the Night period4 and for two to four hours during the Day period. Technical definition and context Night Boost is a supply to a single meter register connected to permanently wired appliances that meet the distributor s criteria for load control, and where all load on that meter register is switched on for both the distributor s defined Night period and also for two to four hours during the Day period. Applicable Register Content Code is CN, and the Period of Availability is consistent with Night Boost supply in the distributor s load control timeframes. Timing for Night Boost supply For Night Boost supply, the controlled load is turned on for the duration of the night period, eight hours from 11:00pm to 7:00am or ten hours from 9.00pm to 7.00am, and is also turned on for a boost period of two to four hours during the day. 4 Night operation periods are discussed above. The signal is sent so appliances are switched on around 11pm and off around 7am. 22

Figure 10. Night Boost supply (legacy meter setup) Network Supply Night Only Meter Uncontrolled Meter Load Control Device Controlled Appliance All other Appliances All Inclusive An All Inclusive supply is a single meter register that measures both controlled and uncontrolled usage at an installation. The All Inclusive setup results in both the controlled and uncontrolled load being recorded on a single meter register. Therefore it is not possible to determine the actual portion of uncontrolled and controlled load used by each connection. The All Inclusive price is generally less than an Uncontrolled supply price, if this is offered, as the All Inclusive price assumes a portion of the energy consumed is subject to load control. Consumer definition All Inclusive is a metered supply that allows the local distributor to control energy to permanently-wired appliances, such as hot water cylinders, as well as providing an uninterrupted supply of energy to all other electrical appliances. Technical definition and context All Inclusive is a supply via a single meter register that provides an uncontrolled supply to most appliances and also provides a controlled supply to permanently-wired appliances that meet the distributor s load control criteria. Applicable Register Content codes are IN18, IN16 or IN20, depending on the timing of load control. Residential Group 23

Figure 11. All-Inclusive supply (legacy meter setup) Network Supply All Inclusive Meter Load Control Device All other Appliances Hot Water Cylinder Table 2. Load control timing options for all-inclusive price plans Description Price Component Register Content Code Option 1 Supply provided for a minimum of 18 hours per day All Inclusive 18 IN18 Option 2 Supply provided for a minimum of four hours in any eight hour period All Inclusive 16 IN16 Option 3 Supply provided for a minimum of 20 hours per day All Inclusive 20 IN20 Day and Night Day and Night pricing is typically offered using single meters with dual registers that switch at predetermined times (set by the local distributor) each day. For the register switch to occur in legacy meters, a load control device or time clock is required to receive the distributors signal to transfer the recording of volume between the day and night register. Specific appliances (e.g. hot water cylinders) are sometimes controlled to align with the Day and Night pricing plan, which means they will be turned on only during the night time. 24

The majority of New Zealand distributors define Day hours as 7am-11pm (16 hours) and Night hours as 11pm-7am (8 hours). Several distributors use different timeframes to accommodate the significant loading levels that are turned on during the night period. The most common other timeframes are Day hours of 7am-9pm and Night hours of 9pm-7am. Consumer definition Day and Night is a supply provided via a single meter which separately records consumption during the Day and Night periods. Technical definition and context Day and Night is a supply via a two-register meter where supply to all appliances (controlled or otherwise) during the distributor s defined day period is recorded on one register, and during the night period is recorded on the other register. Alternatively, metering information from advanced meters can be accumulated to provide the day and night volumes. Applicable Register Content Codes are D and N. Advanced meters are able to record usage in the day and night periods. Legacy metering required a signal from a load control device to switch between the day and night register. Figure 12. Day and Night supply (legacy meter setup) Network Supply Load Control Device Day / Night Meter All other Appliances Where a Day and Night option is available, Distributors should provide one of the following two options: Residential Group 25

Table 3. Description of timing options for day and night supply Option 1 Day period: 7am-11pm (16 hours) Night period: 11pm-7am (8 hours) Option 2 Day period: 7am-9pm (14 hours) Night period: 9pm-7am (10 hours) Volume-based charges for Small Scale Distributed Generation The Distributed Generation Pricing Principles (DGPP) are set out in Schedule 6.4 of the Code. The principles provide that distributed generators are not charged more than their incremental cost of connection. In May 2016 the Authority published a Review of the Pricing Principles for Distributed Generation. The paper proposed to remove the Pricing Principles for Distributed Generation. Currently a number of distributors charge a volume price for energy injected into their network specified as $/kwh. A number of distributors specify a zero price for volume injected into the network. This serves to reinforce that they require retailers to provide both load (X for extraction) and generation (I for injection) volumes as part of the billing process. Some retailers utilise Code provision 15.3 to gift energy generated by their customers to the wholesale market, therefore not submitting the volume generated for reconciliation purposes. These code provisions do not cover the provision of the volume generated from retailers to distributors. If charges are to be levied for volumes generated, the price should be specified as $/kwh for volume injected. 26

4. General Connection Group 27

4. General Connection Group The General group can be used in two ways. First, when a distributor does not differentiate between residential and non-residential customers, the General group can include all connections up to the specified Large Commercial group threshold, excluding those in speciality connection groups such as Irrigation, Unmetered or Temporary Supplies. Alternatively if the distributor has a residential group and pricing category, the General group can include the majority of non-residential connections up to the specified threshold for the Large Commercial group. A distributor may or may not have specific groups for connection types including Unmetered, Temporary supply or Irrigation connections. If such groups are not specified, then these types of connections are likely to be included in a General group. Using the term General avoids the need to refer to a group of customers as nonresidential or use the label small commercial or small business for connections that are not necessarily commercial. As with the residential connection group, if there are subgroups within the general category to reflect specific cost characteristics such as high cost/low cost area categories, these distinctions are non-standard in terms of this guideline and should be noted in the pricing methodology together with a justification for the approach. Capacity threshold between General group and Large Commercial Distributors will need to define an upper limit of installed capacity (typically based on fusing) for the General group. Above the threshold specified, a connection would be included in the Large Commercial group. The upper limit of the General group is the lower limit of the Large Commercial group. The metering requirements of the Code provide a natural demarcation between General and Large Commercial consumers. The Code states that Metering Category 3 and above is required for all consumers with a capacity greater than 500 Amps. Therefore all consumers with a provided capacity greater than 500 Amps will be subject to half-hourly metering, enabling more pricing component options for distributors than consumers without half-hourly metering. A three phase 500 Amp supply is commonly referred to as being 345 kva (an approximation to the calculation of 500 amps at 400V 3 phase of 346.4 kva). Distributors who wish to have a lower capacity threshold between the General and Large Commercial groups, can include this threshold in their network connection standards and pricing documentation. In this instance, consumers above the specified level of capacity are required to install half-hourly metering. 28

If the distributor required half-hourly metering to be installed for consumers with capacity greater than 150kVA, for all connections 3 phase 250Amps or larger, then the threshold between the General group and the Large Commercial group would be set to 150kVA. General pricing components Consumers in the General pricing group are likely to have non half-hourly metering. Retailers will normally be providing consumption data to distributors (where applicable) in a monthly format (EIEP1 files) regardless of whether advanced or legacy metering is installed. When compared to consumers in the Large Commercial group, this limits the pricing options currently available to distributors. Therefore the price components used for consumers in the General group will typically be the simple two-part pricing structure, with fixed $/day and volume $/kwh, pricing components similar to the Residential group. However the metering does not rule out the use of capacity charges. These could be specified as $/kva of installed capacity based on the fuse size provided for the connection. Some distributors also charge profiled demand charges to General consumers. Capacity and demand prices are discussed in more detail in the section on Large Commercial consumers in section 7. Current price structures implemented by distributors Analysis has been performed on the pricing structures of the 29 New Zealand distributors for General and the Large Commercial customers. There is currently a large degree of variability of how distributors group connection and specify capacity thresholds for pricing plans. The analysis showed around 151 price categories of which 130, or 86%, were defined differently. The analysis is included in tables 9 and 10 in the Appendix. These Guidelines, although not directing a one-size-fits-all-approach, highlight some standard capacity bands consistent with the voltage assumptions and fuses used in New Zealand. The aim is for distributors to describe capacity in a standard way and similar sized connections to be grouped into price plans more consistently. Alignment is this area would allow distributors to retain their preferred level of granularly within their existing structures while significantly reducing the number of unique price category definitions. General Connection Group 29

General capacity categories The general group may be divided into two or more categories according to the capacity of connections. Table 4 provides proposed definitions distilled from the 130 different price category definitions across all 29 distributors pricing schedules. While not a complete list, it covers the majority of existing definitions. There has been some amalgamation of lower capacity price categories, specifically Unmetered, 1 kva and 5 kva, and these are included within a 0-10 kva band. The table below sets out standardised kva values and lower and upper limits for pricing categories. Note that fusing for 32 amps and 63 Amps is commonly referred to as 30 and 60 Amps. The common description has been used in the table but the calculation of kva is based on 32 and 63 Amps. This definition promotes rationalisation of the small capacity price categories across distributors. Table 4. Proposed lower and upper price bands - General consumers Description of Fusing Phases Amps Volts Calculated kva Lower Limit (kva) Upper Limit (kva) Single Phase 20 Amps Single Phase 30 Amps Two Phase 20 Amps 1 1 2 20 32 20 230 230 400 4.6 7.4 9.3 0 10 Three Phase 20 Amps Single Phase 60 Amps Two Phase 30 Amps 3 1 2 20 63 32 400 230 400 13.9 14.5 14.9 11 15 Three Phase 30 Amps Two Phase 60 Amps 3 2 32 63 400 400 22.2 29.4 16 30 Three Phase 60 Amps 3 63 400 43.6 31 50 Three Phase 100 Amps 3 100 400 69.3 51 70 Three Phase 150 Amps Three Phase 160 Amps Three Phase 200 Amps 3 3 3 150 160 200 400 400 400 103.9 110.9 138.6 71 150 Three Phase 250 Amps Three Phase 300 Amps 3 3 250 300 400 400 173.2 207.8 151 210 Three Phase 400 Amps Three phase 500 Amps 3 3 400 500 400 400 277.1 346.4 211 350 30

It is not proposed that distributors change the structure of their price categories to match this table, but rather they should utilise the lower and upper limits to align the specification of their existing price category definitions. This will better align price category definitions while allowing distributors flexibility to add, amalgamate or remove existing price categories, as they move to a standardised approach. For example, a distributor might wish to define only three price categories using the definitions above and label these as: 0 15 kva 16 150 kva The selected limits are specified so whole numbers can be used and a simple and unambiguous labelling system adopted. A category labelled 16-150 kva would include all connections greater than 16 kva and less than or equal to 150 kva. 151 350 kva Example: a distributor currently specifying load groups as 0-15 kva, 16-30 kva, 31-45 kva & 45-70 kva should redefine two of their load groups as 31-50 kva & 51-70 kva. Example: a distributor currently specifying <= 69 kva & >69 kva, could be redefined as 0-70 kva & >70 kva. General Connection Group 31

5. Temporary Supply 32

5. Temporary Supply Some distributors offer a specific pricing group for temporary supplies, metered and/or unmetered. These types of connections are commonly used for sites under construction, builders temporary connections, and connections for concerts and other entertainment facilities. If there is no specific group for temporary connections, then the connection would be included in a general or other applicable pricing group. Consumer definition A connection to the distribution network that is temporary. This connection must be removed within [12] months or converted to a permanent connection group and pricing plan. Technical definition and context A temporary connection may be offered by the distributor in certain circumstances. Temporary connections must be either removed or converted to a permanent connection within [12] months. Distributors may charge additional connection and/or disconnection fees for temporary connections. Price components For metered temporary supplies, the distributor should charge a fixed component ($/day). If a volume component is also charged, it should be specified as ($/kwh). If the temporary supply is metered, the meter should be read and volume provided to the distributor. It is possible for capacity and demand charges to be used by the distributor, instead of or in addition to the fixed and volume charges. However given the temporary nature of the connections, the benefit of a simple approach may outweigh other concerns, such as achieving a high degree of cost reflectivity. Where a temporary connection is unmetered, and volume cannot be accurately calculated, a fixed ($/day) pricing structure is recommended. For the avoidance of doubt a temporary unmetered supply should be categorised as a temporary supply rather than as an unmetered supply. Temporary Supply 33

6. Unmetered Load 34

6. Unmetered Load Normally load is required to be metered. Metering ensures that all load is accurately reconciled for the wholesale market and charged to those who used it. There are however a limited range of circumstances where load is not required to be metered. Definition Unmetered load is defined in Part 1 of the Code as Unmetered load means electricity consumed that is not directly recorded using a meter, but is calculated or estimated in accordance with this Code, and includes shared unmetered load and distributed unmetered load The Electricity Authority has issued guidelines on managing unmetered load. Guidelines on Unmetered Load Management v2.1 is available on the Electricity Authority website5 and states: There are three types of unmetered load: standard unmetered load, and two special types (shared unmetered load and distributed unmetered load), each having specific management requirements. The purpose of the Authority s guidelines on unmetered load management is to assist participants to manage unmetered load and submit unmetered load volume for the energy market s reconciliation process. The unmetered load guidelines state that unmetered load may be the only load at an ICP or may co-exist with metered loads at the ICP.6 Standard Unmetered Load Definition Standard unmetered load is not defined in the Code but is explained in the Authority s guidelines7 on unmetered load as: Standard unmetered load is unmetered load at a single point of connection that is distributed across only one ICP, and benefits only that one point of connection. 5 https://www.ea.govt.nz/dmsdocument/8578 available on request from Electricity Authority. 6 EA Guidelines on Unmetered load version 2.1 page 1 646902-3 7 EA Guidelines on Unmetered load version 2.1 page 7 646902-3 there are three types of unmetered load: standard unmetered load and two special types (shared unmetered load and distributed unmetered load). Unmetered Load 35

Individual connections There is a situation where metering is not required for load at a single connection because of its limited consumption. Part 10 of the Code 8 provides for a connection to be unmetered if it is reasonably expected that the load, in any rolling 12 month period, to be no greater than: (i) 3,000 kwh; or (ii) 6,000 kwh if the load is of a predictable load of a type approved and published by the authority. The approved types of load which may be unmetered up to 6,000kWh are: amenity lighting (including billboards, advertising hoardings, bus shelters, phone booths, school signs, public conveniences) street lighting (excluding street lighting that is distributed unmetered load) right of way lighting under veranda lighting floodlighting where the usage of the lights is regular on a daily basis traffic lights radio transmitters/receivers and communications cabinets distribution equipment sewage and storm water pumps. The categories above are permitted to be unmetered connections provided their daily use can be reasonably predicted. It must be known when they will be used and for how long. Designation of a connection as amenity lighting does not ensure it will fulfil the necessary requirements for unmetered load as set out above. A connection with unpredictable load that is expected to use more than 3,000kWh per annum must be metered. It would be charged according to a distributor s relevant metered load price category code. 8 http://www.ea.govt.nz/dmsdocument/8601 36