4466 NEW ZEALAND GAZETTE No. 136

companies owned or controlled by Sanford Limited at the date of this notice.

3. Exemption to quota aggregation limit—(1) As from the date that this notice comes into effect, the Sanford Group of companies is permitted to hold quota and interest in quota in excess of the 20 percent aggregation limit for quota management areas 1 and 9 as provided in section 28W (1) (d) of the Fisheries Act 1983, for the following species and quota management areas and up to the percentage limits as specified in the table below:

(2) The principal notice, with respect to the fishstock TRE 7, is hereby amended to permit the Sanford Group to hold quota and interests in quota of that fishstock up to an aggregation limit of 42.84 percent, from the date that the consent granted under the principal notice with respect to TRE 7 ceases to be valid.

Dated at Wellington this 18th day of December 1994.

D. L. KIDD, Minister of Fisheries.

• S.R. 1986/267
  † S.R. 1990/214

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Commerce

Commerce Act 1986

Statement to the Commerce Commission of the Economic Policy of the Government: Electricity Transmission

To the Commerce Commission

Pursuant to section 26 of the Commerce Act 1986, I hereby transmit to the Commerce Commission a statement of the economic policy of the Government in relation to markets for the transmission of electricity.

Overall Energy Policy Objective

The Government’s energy policy objective is to ensure the continuing availability of energy services, at the lowest cost to the economy as a whole, consistent with sustainable development.

Objective for Trans Power

Trans Power is the owner and operator of the national grid for electricity transmission. Trans Power’s principal objective is set out in section 4 of the State Owned Enterprises Act 1986. Given the nature of its business, Trans Power should also have the following specific objectives to assist it in fulfilling its principal objective:

i. to provide an efficient, reliable and secure national grid at least practicable cost, taking into account factors relating to customer-specific transmission services;

ii. to provide transmission services (including access) to all existing and future grid users with pricing and other contractual terms and conditions which:
a are transparent;
b reflect costs, including risk;
c facilitate nationally efficient supply, delivery and use of electricity;
d promote efficient use of Trans Power’s resources; and
e promote nationally efficient use of transmission services by grid users, and so facilitate efficient resource use;

iii. to supply appropriate and timely information which facilitates efficient investment decisions by Trans Power, and by users of the national grid; and

iv. to earn a commercially appropriate return having regard to the risk of the business.

In these objectives:

• operation of the national grid includes ensuring efficient system coordination and real time electricity security.
• efficiency includes efficiency over the longer term.

Particular policies with respect to transmission contracts

As stated above, the Government’s overall objective is to ensure the continuing availability of energy services, at the lowest cost to the economy as a whole, consistent with sustainable development. Trans Power’s pricing and other contractual terms and conditions for transmission services will be important in achieving that objective. The Government considers that recognition of the following principles will promote efficiency of resource use in the electricity sector:

Transmission pricing

• That Trans Power’s charges should reflect the full economic costs to Trans Power of providing transmission services, including back-up.
• That variable transmission prices to grid users should reflect variable costs incurred in the transmission of electricity (including costs that arise when parts of the transmission grid are constrained), thus providing incentives to minimise those costs.
• That the sunk costs of the transmission grid should be allocated in a way that minimises distortions in investment decision-making by grid users.

The Government is concerned in particular to ensure, in the interests of the economy as a whole, that the way sunk costs are recovered minimises distortions to decisions on the timing or location of investment in new generating facilities or demand-side alternatives. The comparative transmission costs of new generation opportunities should be evaluated on the basis of prices to recover marginal transmission costs (which are primarily marginal losses and marginal constraints), plus the cost of connection to the existing grid. The method of recovering the grid’s sunk costs should minimise distortions to those price signals. (It is noted that redundant transmission assets are to be written down under the Optimised Deprival Value (ODV) methodology. Assets may become redundant where grid users’ capacity requirements are permanently reduced. In the event of redundancies, the level of Trans Power’s charge to recover sunk costs should be correspondingly reduced.)

• That the pricing of new and replacement investments in the grid should provide grid users with strong incentives to identify least cost investment options, including energy efficiency and demand management options.
• That the pricing for new entrants should provide clear signals on the relative costs of locating in different areas.

Grid reliability

• That the target level of reliability should reflect the value to electricity users of a reliable system, taking into account the costs involved.