A niche electricity retailer is concerned that a participant default last Friday will cast suspicion on all smaller players.Two major power companies – Genesis and Mighty River Power – have issued the NZX with notices of breach after it froze
A niche electricity retailer is concerned that a participant default last Friday will cast suspicion on all smaller players.
Two major power companies – Genesis and Mighty River Power – have issued the NZX with notices of breach after it froze multi-million dollar payments on the wholesale electricity market.
It is understood that a small retailer caused the glitch by failing to make a payment into the system, causing all payments to be frozen until Monday.
It is understood that Genesis had expected a payment of about $80 million and Mighty River about $50 million.
Both Genesis and Mighty River Power have said that they believe the payments should still have been made – default or no default – and want to ensure such a glitch will not happen again.
NZX bought the wholesale electricity market as part of its $13.1m deal with The Marketplace Company (M-Co) last year.
Not just the big guys
The payment delays had the potential to cause serious financial problems for the major power companies – for example, if required to pay interest on overdraft over the weekend.
But smaller players were also affected and have additional concerns.
Murray Dyer, commercial director of niche electricity retailer Simply Energy, called on NZX to provide market transparency in the wake of Friday’s default.
“The default by this participant has the potential to cast dispersion on all of the new entrant and specialist retailers,” he said.
“We feel it is important to register for the record that Simply Energy was not the party that defaulted on Friday; and that we have a record of making full market settlements since our inception in 2005.”
Mr Dyer requested that NZX complete its investigation in a timely manner and make an appropriate announcement about the defaulting party to the market.
NZX has said that it will not be commenting on the issue, in accordance with its service provider agreement.
