Congested electricity markets: recent examples from New Zealand

These slides present examples of normal price separation, reserves market abuse under nodal pricing, and simple rent seeking. The events described occurred in New Zealand in 2011 and 2012. The material is intended as a topical illustration for the phenomena described in Harvey and Hogan (2000) (reference given at end). In mid���2012, Meridian Energy, a state���owned vertically integrated generator/retailer, allegedly exercised market power in the New Zealand Electricity Market. It did so by pricing up reserve services while the HVDC inter���island connector (Cook Strait cable) was at reduced capacity during an engineering upgrade. In March 2011, Genesis Energy capitalized on its market power and temporarily raised prices by a factor of 120��. The New Zealand regulator subsequently reduced this to a 17�� increase. Harvey, Scott M and William W Hogan (10 January 2000). Nodal and zonal congestion management and the exercise of market power. Cambridge, Massachusetts, USA: John F Kennedy School of Government, Harvard University.
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