Retail and Network Tariff Schedules

Author: Malcolm Souness, Director, 221b Limited
Originally published 4 May 2016

Having worked within the energy sector for some time, I never thought that I'd find electricity pricing schedules interesting. Often published tariffs are taken for granted, however published tariffs are not without errors.

Network Tariff Schedules

As part of the development of the 221b electricity tariff database, a lot of electricity network pricing schedules are reviewed. One of the practical issues when referring to network pricing schedules is the inclusion of previous tariffs. On more than one occasion we've seen retail network tariffs invoiced using the prior year's figures. In order to improve data quality and the overall data-entry process, 221b can provide retailers with a set of NZ electricity network tariff schedules with the previous year rates (and pre-total rates) blanked. This means that there is one value per tariff - limiting the scope for chair keyboard interface error.

Another finding is the propagation of spelling errors on some of the smaller network pricing schedules and filenames. While this isn't always material, it does leave the user wondering what else may be wrong with the pricing schedule.

One of the more confusing factors is determining the allocation of variable and demand tariffs to GXP based energy volumes. Network pricing schedules should improve the indication of which tariffs are reconciled at GXP, and which are at meter for each rate that is allocated at GXP - moreso where there is a mix of GXP and meter level tariffs.

The allocation of network tariffs to explicit price categories should also be refined - making it easier for retail operators to allocate tariffs in their billing engines - something that becomes more critical where tariffs unbundled on the customer invoice.

Retail Tariff Schedules

As we have worked our way through the North Island pricing schedules for electricity retailers it has become apparent that retailers have scope to improve the quality of their published pricing schedules. Recently 221b has identified a number of errors ranging from;
  • inconsistent figures on EA Levy,
  • controlled/uncontrolled price inversion, and
  • really poor margin on low user tariff margins.
Pricing schedule errors have potential to mislead customers, significantly erode margin and in some instances, expose the retailer to investigation by the Commerce Commission. It's always better to be cautious when releasing tariff schedules to the public.