✨ Electricity Reserve Energy Policy
30 OCTOBER 2006 NEW ZEALAND GAZETTE, No. 123 3615
be a primary mechanism for the Commission in endeavouring to ensure
security of supply in a 1 in 60 dry year. Any reserve energy procured to
ensure security of supply in a 1 in 60 dry year should also be available to help
cope with other unexpected supply contingencies, such as serious grid, plant
or fuel supply disruptions.
48
The Government intends that the mechanism should operate as outlined
below.
Quantity and type
49
The Commission’s portfolio of reserve energy should be limited so that it is
capable of producing no more than 1200 GWh of reserve energy over any
given four month period. Transmission constraints and other relevant factors
need to be taken into account in assessing the effective contribution of reserve
energy to ensuring security of supply.
50
The reason for a firm maximum quantity is to ensure market participants have
certainty as to the maximum role of the Electricity Commission in providing for
reserve energy, and to minimise the risk of reserve energy affecting incentives
for market participants to construct new capacity, enter into hedge and other
contracts, and invest in demand-side management.
51
In contracting for reserve energy, the Electricity Commission should, as best it
can, maximise static and dynamic efficiency. It should also take into account
the additional flexibility provided by short term contracts.
52
Generation plant that is contracted as reserve energy should primarily
comprise plant with low fixed costs and high operating costs, including plant
that would otherwise have been mothballed or retired, rather than baseload
plant.
53
In deciding whether to contract with existing plant, the Commission should
take into account:
• the benefits of lower cost to the reserve energy scheme; and
• the potential detriments to security of supply and competition in the
‘ordinary’ market before replacement generation is commissioned.
54
Contracted demand response should form part of the Commission’s portfolio
of reserve energy, provided this is practicable, and the Commission is
confident that the reduction in demand is additional to normal demand-side
responses to higher prices.
55
The Commission should develop and publish its processes for procuring
reserve energy including its processes for assessing competing offers of
reserve energy.
56
The Commission should seek to minimise the impacts of the reserve energy
scheme on the ‘ordinary’ market. The Commission should adopt a tight
ring-fence whereby reserve energy may be used only for security of supply
objectives, with the exception of distributed generation used for distribution
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2006, No 123
Gazette.govt.nz —
NZ Gazette 2006, No 123
✨ LLM interpretation of page content
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Security of Supply Objectives for the Electricity Commission
(continued from previous page)
🏛️ Governance & Central AdministrationElectricity, Security of Supply, Reserve Energy, Hydro Management, Dry Year Risks, Policy Development, Operational Standards, Minimum Hydro Zone, Conservation Campaign, Consultation Processes, Transparency, Stability, Market Interventions, Reserve Energy Contracts