New Zealand Gazette – 2006 – No. 123

Page 3617

✨ Electricity Security of Supply Policy



30 OCTOBER 2006 NEW ZEALAND GAZETTE, No. 123 3617

incentives in the ordinary market. Efficiency should include both static and
dynamic efficiency. The review should take into account developments in
other areas of security of supply policy such as security of supply co-ordination
policy (see below).

66

The review should consider whether it is appropriate to relax the tight
ring-fencing policy after considering any reduction in dynamic efficiency that
this might create. The review should also recommend whether alternative
levy arrangements would produce a fairer and more efficient outcome.
In particular, it should investigate whether to allow for some element of
self-provision of security of supply with an associated exemption from the levy,
and if so whether the extent of any self-provision should be audited by a body
independent of the Commission.

67

The review should provide an opportunity for public consultation, and should
make recommendations to the Commission by 31 March 2007. The
Commission should consider the report and make recommendations to the
Minister of Energy by 31 June 2007.

Security of supply co-ordination

68

A key requirement for the secure operation of the New Zealand system is that
hydro lakes are managed optimally to use as much water as possible while
avoiding the risk of running out of storage, and that thermal plants have
adequate fuel and operate in a timely manner to complement hydro generation
and preserve lake levels when required. Risks of inadequate security of
supply co-ordination will need to be monitored by the Electricity Commission.

69

Introduction of the reserve energy scheme may also impact on security of
supply co-ordination. A risk is that (for example) hydro generators may
observe the reserve energy and decide to run their lakes lower than they
otherwise would have, or thermal generators might decide to procure less fuel.

70

The Commission should seek to minimise these risks by compiling and
publishing high quality information, including on hydro lake levels, thermal fuel
availability, scheduled plant and transmission outages and minimum hydro
zones.

71

The Commission is also expected to be active in monitoring developments,
using the powers available to it, and, if necessary, making recommendations
to the Minister on any further powers it believes to be necessary to ensure the
market operates efficiently. This may involve:

• undertaking ‘co-ordination tenders’ to incentivise (via payments) a
combination of hydro storage and thermal fuel that is sufficient to
achieve the security of supply standard over a short term timeframe
(e.g. one year)

• using the proposed additional powers in the Electricity Act 1992
to recommend regulations or rules, which should be applied in a
non-discriminatory manner, to:

o set minimum requirements on generators to hold or provide for
reserve fuels (including water)



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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2006, No 123


Gazette.govt.nz — PDF NZ Gazette 2006, No 123




✨ LLM interpretation of page content

🏛️ Security of Supply Objectives for the Electricity Commission (continued from previous page)

🏛️ Governance & Central Administration
Electricity, 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