20 Mar 2013

Electricity Authority proposes UTS rule changes

10:06 am on 20 March 2013

The Electricity Authority is proposing changes to the rules on what is known an undesirable trading situation or UTS.

The authority issued a consultation paper after a massive price spike two years ago prompted it to declare a UTS, which lead to High Court action.

The court dismissed an appeal by Genesis Energy, Todd Energy and Contact Energy against the authority's move to reset prices, arguing it rewarded bad business practice and firms should have had hedging in place.

In its consultation paper, the authority says there is no need for fundamental changes, but the definition of a UTS is unclear in some areas and there is no set time period on how far back UTS investigation may apply. It also says the remedies are sometimes unclear.

Electricity Authority chief executive Carl Hansen said the changes should give the industry and major users more certainty and three areas need improvement.

He said points of clarification needed include the definition of a UTS, the scope of markets to which it applies and how far back it's possible to claim for an event.

Mr Hansen said of the 16 alleged undesirable trading situations, the authority has upheld just three.

Submissions close on 1 May.