Settlement Residue Allocation Methodology

In 2023, the Electricity Authority decided on a new approach for allocating settlement residue to customers, and the Authority also amended the Code to allow Transpower to recover from all transmission customers its reasonable costs of developing, implementing and maintaining the SRAM. Our new Settlement Residue Allocation Methodology outlines our SRAM allocation methodology and our cost recovery methodology, and replaces our previous method for allocating settlement residue (often referred to as loss and constraint excess).

Transpower receives monthly settlement residue payments from the Clearing Manager (NZX) under Part 14 of the Electricity Industry Participation Code 2010, and is required to allocate and pay the settlement residue received to customers on a monthly basis. Under the new SRAM, settlement residue related to interconnection assets will be allocated to customers identified (under the BBC simple method) as expected to benefit from those assets located in each simple method region. There will be no change to the way settlement residue related to connection assets is allocated under the new SRAM.