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Ancillary Services

Ancillary Services Contracts

The System Operator has contracts with generators, customers, retailers and distributors to provide the following Ancillary Services:

• Frequency regulating reserve (FRR)
• Instantaneous reserves (IR)
• Over-frequency Reserve
• Voltage Support Services
• Black start.

These services are managed through the annual Procurement Plan which is active from 1 December each year. The System Operator will use reasonable endeavours to implement the Procurement Plan by entering into those Ancillary Services.

Ancillary Service Rates

Voltage Support
The System Operator sets a year in advance, the Peak Rate and the Penalty Rate for each zone used to allocate voltage support costs. The System Operator uses a methodology for setting those rates to determine, for each zone, the unique pair of rates that satisfy the following criteria:

• The peak and penalty revenue derived from kvar data for each distributor kvar reference node (grouped GXPs) will recover the estimated cost of the voltage support contracts, assuming that kvars at each distributor kvar reference node are as in the previous calendar year.
• The penalty rate is equal to or greater than the per unit cost of new high-voltage var support equipment.
  Rates are rounded to the nearest cent per kvar.

For the twelve months beginning 1 March 2010, the rates determined according to this methodology are:

Nominated Peak Demand
Distributors are required to nominate annually in advance a peak demand in kvar at each distributor kvar reference node in each zone. To avoid doubt the nomination is for offtake only, and should not net off any injection.

For the twelve months commencing 1 March 2010 nominations have been requested for zone 1.

For information on making submissions of the nominated peak demand contact the system operator.

Zone 1 Voltage Support Requirements

A needs assessment was produced to set out the System Operator’s rationale for procuring additional dynamic reactive voltage support in the Upper North Island, as part of the 2006 Ancillary Services Procurement round.