3452 NEW ZEALAND GAZETTE, No. 139 29 OCTOBER 2004

Wholesale market

29 The Commission should facilitate and promote stronger demand-side participation in the wholesale market in support of the Government’s overall objectives.

Conveyance

30 Electricity should be conveyed efficiently on the national grid and distribution lines. Transmission and distribution companies should have better incentives to manage transmission and distribution losses and constraints. The Commission should promote pricing structures that provide appropriate signals to manage those losses and constraints.

End-use

31 The Commission should promote the efficient use of electricity. It should seek this objective in multiple and mutually-reinforcing ways:

• by promoting and facilitating the efficient use of electricity by end-users, including providing financial incentives for investment in electricity efficiency where it is cost-effective to do so and in response to market failures and barriers
• by promoting cost-reflective pricing
• by seeking innovative ways to enable residential and other consumers without time-of-use meters to respond to pricing incentives to use electricity more efficiently
• by keeping under review, and making recommendations to the Government as appropriate, on whether there is a strong case for requiring the progressive introduction of smarter meters for consumers
• by encouraging and facilitating demand-side participation in the wholesale and retail markets, and
• by promoting the efficient use of ripple control.

32 The Electricity Act 1992 enables the electricity levy to cover the Commission’s costs of promoting efficient use of electricity. The Government expects the Commission to put in place cost-effective programmes and arrangements to promote efficient use of electricity and to make recommendations on its funding requirements for this purpose.

33 In undertaking such activities, the Commission should work closely with EECA, which is accountable to the Minister of Energy and has primary operational responsibility for delivering the Government’s National Energy Efficiency and Conservation Strategy. In addition to wide-ranging promotional, information and assistance programmes, EECA is responsible for administering regulations relating to energy efficiency under the Energy Efficiency and Conservation Act. It is important that the Electricity Commission’s activities complement the work of EECA and that duplication of effort is avoided.

34 The Government expects the Commission and EECA to publish a Memorandum of Understanding on how they will work together co-operatively to minimise any duplication of activity. Any purchase by the Commission of services from EECA should be formalised in contracts which should be made available on the Commission’s website.

Security of supply

Background

35 A key priority of the Government is to improve security of electricity supply. Shortage risks occurred in 2001 and 2003, resulting in sustained high spot prices and the need for emergency conservation campaigns. This has caused inconvenience and disruption, and may have affected the attractiveness of New Zealand for business investment, especially for sectors using relatively large quantities of electricity. In the Government’s view, security of supply is vital to achieving its objective of sustainable economic development.