Sparks fly as Pulse accused of paying late

Electricity Commission chairman David Caygill. Photo / Mark Mitchell

The blame game is in full swing in the wake of more than $300 million in payments being frozen on the electricity trading market.

Electricity Commission chairman David Caygill has received breach allegations from electricity generators Mighty River Power, Genesis Energy and Contact Energy regarding the failure of monthly settlements last Friday.

He said payments due at 4.30pm on Friday were settled at 8.30am on Monday, putting some electricity generators in the red.

Caygill said he had also received a complaint from the clearing manager, the NZX, against Pulse Energy for non-payment on Friday.

He said the claim against Pulse Energy was not that it caused the subsequent problem that has, in turn, become a claim against the NZX.

"It may be that there is a relationship between these two things, but from our point of view they are separate. There were rules around when Pulse was supposed to make payments, just as there were rules around when NZX was supposed to make payments."

Caygill said that, to his knowledge, it was not the first instance of someone being late paying the clearing manager, but it was "certainly unusual" for the clearing manager to be late in making payment to the market participants - "assuming of course that is what has actually happened".

In an announcement yesterday, the NZX said it had reported two breaches by electricity retailer Pulse Energy to the commission - one occurring last Friday and the other on Tuesday.

It said the breaches related to Pulse not making prudential and capital payments in time.

Pulse Utilities chief executive Dene Biddlecombe rejects suggestions the company was at fault for bringing down the trading system.

He said the company, which has about 4000 customers, had consistently made its payments early and last Friday was no different with $750,000 paid just after 3.20pm.

"I'd suggest they are diverting the pressure away from the NZX clearing mechanism on to Pulse," said Biddlecombe.

"The major point is, there are processes in place for this not to affect payment of $310 million. We paid on time, that's one point. The second-most-significant point is what's going wrong with the NZX systems."

Biddlecombe does accept that on Tuesday the company was late paying $152,000 into a cash account maintained by the NZX.

Several hundred thousand - around 52 days of electricity payments - is maintained on deposit at the NZX by Pulse to ensure it can settle its supply bills.

He said it was an oversight by the company's chief financial officer that saw the payment made 18 minutes late.

Biddlecombe said the NZX had used the late payment "as a further opportunity to put the boot in".

Caygill said the commission was not making any judgments at this point, but simply investigating the breach allegations.

"The rules that we enforce have been broken. We check to satisfy ourselves as to what the facts actually are, including giving the parties the chance to respond, and determine the appropriate response."

He said the outcome of the investigation, which could take weeks if not months, might not be a fine or penalty.

"Much more often we sit down and talk about the systems they're using to try and make sure that if something did go wrong, it doesn't happen again."

TWO-SIDED STORY
* "I'd suggest they are diverting the pressure away from the NZX clearing mechanism on to Pulse." - Pulse Utilities boss Dean Biddlecombe
* "There were rules around when Pulse was supposed to make payments, just as there were rules around when the NZX was supposed to make payments." - Electricity Commission chairman David Caygill