Supplied and Submitted Volumes

Author: Malcolm Souness, Director, 221b Limited
Originally published 5 June 2019

Electricity industry participants (traders) in New Zealand are required to submit calendar normalised "submitted" energy volume (AV-080 for non half hour data, and AV-090 for half hour data), as well as the "supplied" (billed/invoiced) volume (AV-120). Refer: Reconciliation Manager Functional Specification. The normalised volumes are used for market settlement and clearance.

The Reconciliation Manager publishes a report (GR-130 - Electricity supplied/submitted comparison) that presents the total submitted and supplied volume per trader per balancing area (geographic region). Each electricity trader receives a copy of this report, which includes the supplied and submitted volumes from each trader.

Using the cumulative difference between billed and submitted volumes from this report (and the latest revisions of prior months), the historic billing performance of each trader can be examined. Under steady state conditions, a trader will present a neutral offset position on an annual basis - that being the cumulative billed volume over a 12 month period should track closely with the cumulative market submission volume. The exception to this is vacant consumption, which is submitted to the market, but not invoiced to a customer.

A trader with consistent growth will present a negative offset on an annual basis. This is due to the timing delay between billing the customer whilst normalised volumes are submitted to the market.

A positive offset indicates an error in the reported billed volume, or consistent under-reporting of volume to the electricity market. This scenario is not expected to be seen, with the exception of closure of a trader, with invoiced volumes reported for the month(s) following the end of trading (submission of normalised volume to the market). Several traders do present an increasing positive offset, indicating billed volumes greater than normalised volumes submitted to the market. In the absence of a reporting error, or where market volumes are submitted under a separate participant code to billed volumes, the implication of this trend is that the trader may be under-submitting volume to the market.

Given the 1, 3, 7 and 14 month revision cycle of the data, the impact of billing reversals can be inspected. This is where a trader has to reverse and re-bill the customer for previous consumption in a period after the volume was initially submitted. This is another good measure for the accuracy of billing.

When viewed at an aggregate level, the entire "billed" and "submitted" volumes for each month can be used as a measure for the health of the electricity retail sector. It is suggested that this report could applied to measure the impact that changes in the amount of customer switching may have on the cashflow of energy retailers.

Whilst the GR-130 reports are only available to electricity market participants (not Joe public), an indication of the billing performance of each trader is publicly available in the Reconciliation Participant Audit Reports published on the Electricity Authority website.

What does this mean - basically as a trader, where you see a large reduction in billed volume as wash-up periods progress, it is a great opportunity to target the customers of that retailer in that region with a basic "we actually bill you right" offering.

On similar note, where billed volume is significantly less that submission volume, the retailer may have a problem with billing - something that smart investors would take into account when determining the value of a publicly listed company. In following months, that value will likely be recovered, giving a heads-up that customers may be hit hard by the trader in the next billing cycle.