An independent System Operator

Section 8 of the Electricity Industry Act 2010 confirms Transpower is the System Operator.  Part 7 of the Electricity Industry Participation Code 2010 (Code) makes it clear that the System Operator’s role is distinct and separate from any other role or capacity that Transpower has under the Code, including as the Grid Owner.  This separation is critical for the independence and impartiality of the System Operator in performing its role.

Transpower has adopted a strong governance model to enhance the System Operator’s independence, including a sub-committee of the Transpower Board dedicated to the role of the System Operator. The responsibilities of the sub-committee include the strategic direction of the System Operator function; risk management; the System Operator’s policy framework; and assessing and reporting on the System Operator’s performance.

The System Operator has a senior management role responsible for the independence and impartiality of the System Operator function.  The responsibilities of this role include monitoring and reporting to the Electricity Authority on inherent threats to the System Operator’s independence. The current identified inherent independence threats that are being actively monitored and managed by the System Operator are:

  • The System Operator’s procurement of ancillary services.
  • The System Operator’s dispensation and equivalence arrangement decisions.
  • The System Operator’s monitoring of compliance with the Code, including by Transpower in its role as the Grid Owner.
  • The System Operator’s outage planning and coordination.    

Transpower has established an annual assurance programme to address one (or more) of the System Operator’s inherent independence threats.  This programme provides the Transpower Board and senior management with assurance about the effectiveness of governance, risk management, and internal controls to manage the System Operator’s independence.  Transpower reports to the Electricity Authority on the annual completion of this assurance programme.

For any questions or comments about the independence or impartiality of the System Operator function, please click here