1.   What is the disclosure of risk management contract information regime?

The disclosure of risk management contract information regime provides interested parties with a mechanism for comparing key risk management contract details published on EA's EMI website. The regime addresses the lack of information available for the formulation of historic contract curves and allows parties to assess the competitiveness of the risk management contract market. Parties looking to enter into a risk management contract are able to view details of historic contracts which will assist them when negotiating their own contracts.

2.   Who submits contract details?

Only Participants, as defined in the Electricity Industry Participation Code 2010, are required to submit contract details. If the seller of a hedge contract is a Participant, the seller is required to submit contract details; if the buyer is a Participant they must verify that the submitted details are correct (if the buyer is not a Participant than verification is optional). If the buyer is a Participant, and the seller is not, the buyer is required to submit information. If neither the seller nor the buyer is a Participant, details of the risk management contract do NOT need to be disclosed.

3.   What are the timeframes for submission?

A Participant must submit disclosure data no later than 5pm, 5 business days after the trade date for a CfD or options contract and 10 business days after the trade date for all other risk management contracts. Failure to comply will be considered a breach of the Electricity Industry Participation Code 2010.

4.   Why are non-Participants exempt from the disclosure regime's requirements?

Non-Participants are exempt from the disclosure requirements because the Electricity Authority believes the inclusion of non-Participants would result in increased compliance costs with little additional assurance around disclosure. The Electricity Authority will consider reviewing this should the number of non-Participants involved in risk management contracts rise considerably.

5.   What do I need to do if I receive an email from the risk management disclosure system asking me to verify information?

If you are a Participant you must verify the information within 2 business days. Failure to comply will be considered a breach of the Electricity Industry Participation Code 2010.

If you are a non-Participant you have the right, but not the obligation, to verify the disclosed information.

6.   If I disagree with the information which has been disclosed what can I do?

If you disagree with the information that has been submitted, you can submit that the information is incorrect. You can do this by clicking on the "dispute" button next to the relevant contract on the verification page.

The submitting party will receive an email informing it that the contract information has been disputed; it will then be required under the Electricity Industry Participation Code 2010 to correct the information. You will be sent another email with the corrected information which you can then verify (or choose not to verify if you are a non Participant).

If the dispute is not resolved within 10 business days of the Participant receiving notice that the information is disputed, then the system will indicate the contract is subject to a long term dispute.

7.   What do I do if I submit or verify a contract but later realise the information is incorrect?

Contract information can be amended by the submitter using the edit function on the system. A verification email will be sent to the other party advising them of the changes.

The Hedge Disclosure system will calculate the time weighted average contract price and load weighted average contract price from the information disclosed in the price schedule using the following formulas respectively:

Time weighted average formula:

Load weighted average formula:

Where:

CP_tw     means the time weighted contract price

CP_lw     means the load weighted contract price

n        means the number of different prices within the contract

P_i       means a price specified in the contract (for contracts with an adjustment clause it is a starting price)

TP_i     means the number of trading periods during which each price in the contract applies

V_i       means the total volume for which price P_i applies

LF      means the location factor for the node at which the price is set in the contract, as published by the Board in accordance with rule 5

LAF    means a loss adjustment factor which is:

(a) if the contract price for the contract is referenced to a point of connection on the grid, 1; or

(b) for all other contracts, 0.937 (being the difference between 1 and the loss factor of 0.063).

9.   What is a grid zone area?

The purpose of the grid zone area is to protect parties' anonymity. There are five grid zone areas, three in the North Island and two in the South Island. Within each grid zone area there is a nominated node to which contracts are normalised.

Table one, below, outlines the different aggregations of locations into Grid Zone areas and displays the normalisation node for each Grid Zone area.

Table 1. Aggregated Grid Zone areas

10.   What is a location factor?

A location factor is the historic price ratio between a specific node and the relevant normalisation node for that area for the previous 12 months. This information will be published annually on both the Electricity Authority's website and the risk management disclosure system and will allow Participants to make the necessary adjustment to their contract price calculation.

11.   Do I need a username and password?

You will need to log on to the system in order to submit contract details or view/download the contracts of which you are a party. If you require a logon to the system, please contact the WITS administrator on 0800 426 648 or wits@nzx.com.

12.   How should multi-year contracts with variable volumes over the year, like those with 144 price periods per year, be structured in the price schedule?

For a contract with 144 price periods per year, submit 144 rows per year. Each row should reflect the average volume in MWh per trading period. This approach should align with the total volume in the master file.

13.   How do we handle large amounts of data for long-term contracts with many ICPs across multiple nodes?

For long-term deals with multiple ICPs (e.g., a retail chain with 160 ICPs across 100 nodes), the system can handle aggregated data. You can sum up the volume to the node level (GXP) and use the 144 price block format (or, your applicable pricing schedule) for simplification.

14.   Should the price schedule be submitted at a half-hourly level or grouped according to contract pricing?

You need to upload separate rows where the trading periods have different expected volumes per trading period, and/or different prices. Grouping the data by price or volume period will reduce the administrative burden.

Please see below some examples with dummy data to demonstrate how you might disclose information for trading periods.

Solar contract for August 2025

In this contract trading periods with similar expected price and volume are grouped together for simplicity. For example, trading periods 1-12 as well as trading periods 34-48 are grouped with a price of $100 for 0 MWh. By grouping similar periods, you avoid needing to list each trading period individually when the volume and price are consistent.

Wind contract for August and September 2025

In this contract trading periods with similar expected price and volume are grouped together for simplicity. Trading periods 1-48 are grouped with a price of $100 for 100 MWh. By grouping similar periods, you avoid needing to list each trading period individually when the volume and price are consistent.

15.    What does the price schedule look like for wind and solar agreements?

• For wind-based agreements, use a monthly average MWh per trading period for volume estimates, as it¿s challenging to forecast accurately.
• For solar-based agreements, provide an average or expected daily shape profile for the relevant time of year, as these forecasts are typically more accurate.
• For consumption volume, use the site's average or expected load profile for the time of day and time of year.

The shape assists the Authority to monitor contract arrangements. For example, a solar shape being "peaky" may mean a higher than baseload price, and a solar firming may therefore be offpeak and lower than baseload.

Please see Q14 for some examples on how you might disclose information for wind and solar agreements.

16.   What should be uploaded to the 'Volume' field in the price schedule for contracts covering multiple trading periods with the same price?

For a contract covering multiple trading periods with the same price such as Fixed Price Physical Supply contracts, input the average volume per trading period for all periods that each contract price applies. The volume should reflect the quantity for each trading period in MWh. You do not need to upload separate volumes for each half-hour period if they're the same. Summarizing the volume across periods with similar prices and volumes will help simplify the upload process.

17.    How should we disclose PPA and firming agreements?

This may depend on the specific contract arrangements with your customer.

For Power Purchase Agreements (PPAs), they may be either FPVV or CfDs, depending on the specific contract arrangements. In the master file they must be labelled with energy_type= 'G' as the contract relates to electricity generation.

For firming agreements, they may also be either FPVV or CfDs, based on the contract arrangements. Again, the master file must show energy_type = 'G'.

If the arrangement is more complex than the hedge disclosure system can accommodate, submit the information as if it were a novel contract and provide the information required under clause 13.219. This will help us refine the hedge disclosure system to monitor market innovations.

18.    Should we upload two price schedules for sleeving agreements?

'Sleeving' may involve the customer's physical load after subtracting the firming or PPA volume. This is likely to be a FPVV contract, but if the contract involves both consumption and generation it may be more efficient to disclose as two separate FPVV contracts - one linked to generation and the other to consumption. If the generator provides the PPA directly to a customer, sleeving might be simpler and could be disclosed as a single FPVV contract.

If the arrangement is more complex than the hedge disclosure system can accommodate, submit the information as if it were a novel contract and provide the information required under clause 13.219. This will help us refine the hedge disclosure system to monitor market innovations.

19.    How should demand response contracts be classified? Are they considered "Options" or "Novel" contracts?

Stand-alone demand response contracts should be disclosed as Options.

If the offtake pricing (CfD or FPVV) has an element of optionality built into the arrangement this should be disclosed as if it were a novel contract and provide the information required under clause 13.219.

20.    What information will the contract counterparty receive for confirmation?

NZX will send the counterparty the master file containing contract-level details, along with a link to the price schedule for confirmation.

21.    Does the Code require us to disclose contracts for multiple non-half-hourly sites that collectively meet the 1MW threshold?

Contracts covering multiple sites that collectively meet the 1MW threshold need to be disclosed. This is in the definition of fixed-price physical supply contracts in the Code. This requirement remains unchanged in the Code amendments that will take effect on 30 October 2024.

22.    The contract doesn't have a specified price at the time of disclosure. What should I do?

If the contract has a starting price but is not fixed over the term, you can disclose it using the starting price, and also use adjustment clause = Y, or index_price = Y, and provide the index_price_formula to explain how future prices will be set.

If the contract price is set by a methodology or in blocks at specified times (ie, there is no fixed price at the trade date), you should still disclose the contract with adjustment clause = Y and index_price= Y, then specify the index_price_formula with the price setting details.

If the price is linked to a fuel price, disclose the contract using fuel_type = [relevant fuel] to indicate the connection to fuel pricing.

23.    How do I disclose a swaption?

A "swaption" is an option on a swap, where the option has a premium and an allowable total volume. Whenever the option is exercised, a swap or CfD is created.

To disclose a swaption, categorise it as an Option contract and mark option_buyless = yes. This fulfills the Code under clause 13.219 (1) (h) (ii), which specifies that for call options, you must indicate if the buyer has the right to buy less than the quantity.

You do not need to disclose individual exercises or calls (ie, CfD) from a swaption.