Electricity Efficiency

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Draft Government Policy Statement on Electricity Governance (Released 12 March): Summary of and Comment on Submissions

[ Last Updated 22 July 2008 ]

Submission	Officials' Response
General – Powerco, Contact, Vector Supports EECA and EC working collaboratively. Supports the clarification of roles and relationships between the two agencies. Supports promoting concentration of expertise, coordination of effort and avoidance of duplication.	Noted.
General – MRP There should be a clear succinct set of government objectives for electricity efficiency.	Noted. No change - it is considered that the government's objectives are set out in Part 4.
MRP Sceptical that the senior officials group will address the problem of proliferation of agencies with overlapping and competing interests. The GPS which only binds the EC is not the appropriate mechanism for dealing with this.	Noted. The GPS is however an appropriate mechanism for obtaining EC involvement with this group.
Para 33 – Odyssey Market forces won't deliver solutions in accordance with NZES/NZEECS when economic cases are based on short time frames, limited capital resources and institutional barriers.	Noted.
Para 34 – Odyssey Demand side management has significant potential that is not being introduced on a wide scale because of the "business as usual" environment.	Noted. GPS places importance on demand side as does NZES/NZEECS.
Para 34 – IPENZ Supports focus on demand-side management but notes statement is not very specific and proposes that it be expanded to say how and what the priorities are. Notes that other objectives include more detail.	It is accepted that some other objectives include more detail, but there are other specific references to demand-side management in the GPS. The government wants the EC to develop detailed initiatives, in consultation with all stakeholders.
Para 35 – Odyssey The agencies listed can provide some degree of coordination, but if NZES objectives are to be achieved other agencies and sectors must be involved (e.g. education, transport, R&D).	Noted. This is a matter for energy efficiency policy rather than GPS.
Para 36 – Odyssey Consumer group consultation is important. The draft GPS will go some way to removing public misunderstanding as to current responsibilities.	Noted.
Para 37 – ENA Proposes an additional sentence "These programmes should span New Zealand's economic activities, including the activities of all government agencies developing and implementing electricity dependent policies."	Unnecessary. Paragraphs 13, 14, 35 and 36 refer to the need to work with other agencies involved with energy efficiency and to the senior officials group that will coordinate the development of priority energy efficiency programmes.
Para 38 – EC, MEUG, Contact, Meridian, MRP It is important to have contestability in delivery of energy efficiency initiatives. EC must hold competitive tenders for any work it funds and EECA should only be appointed if it wins tender. Paragraph should be amended to emphasise that using EECA to help deliver work programme should be consistent with good procurement practice.	Agreed. It may not always necessary for EC to tender but EC must at all times follow good procurement practice and para 38 will be amended to make this clear.
Para 40 – ENA Proposes an additional sentence proposing the development of principles for differentiating purchases aimed at achieving government policy objectives which should be funded by government and purchases for the benefit of market participants which may be funded by levy.	Noted. The levy reimburses the Crown for the EC's costs in meeting its functions under the Act. The Act permits that the EC's functions may be carried out by contracting with other parties, although the EC remains accountable for spending of its appropriation. The EC's activities for which the costs are recovered from the industry must be in the EC's work programme – funding from the EC will be available for priority actions that appear in the EC's work programme.
Para 41 – MRP Reference to a detailed report that is not attached to the GPS is unhelpful. Suggests a reference be added.	Noted. Paragraph has been redrafted.
Para 41 – Vector Extreme caution should be adopted in using the KEMA report to underpin development of electricity efficiency activities.	Noted.
Para 41 – Odyssey KEMA report is adequate for determining best use of subsidy funds but in insufficient to determine how effective technologies will be in a normal business environment.	Noted.
Paragraphs 42/43 – Contact, MEUG, Genesis Concerned at use of 5% discount rate. Emphasis should instead be put on informing consumers of benefits of efficiency measures and lack of knowledge is a key obstacle to uptake.	Noted. GPS reflects NZES (p85) and NZEECS. EC only required to include an assessment using 5% and advise how this has been taken into account when assessing cost-effectiveness of programmes.
Para 42 – Odyssey A more flexible use of discount rate should be used.	Noted. GPS requires consideration of discount rate, but does not specify this as only rate.
Para 44 – EC, Meridian, IPENZ, Genesis This paragraph relating to EnergyWise Homes project is not necessary.	Agree. Unnecessary to specifically identify that project. Government policy objectives and outcomes for the EC are adequately covered.
Para 47 – ENA, Vector Proposes an additional sentence requiring the EC to consult actively with the wider electricity industry on proposals to promote demand side objectives rather than just the seeking the views of established wholesale market participants who will not necessarily welcome competition from the demand side.	Unnecessary because GPS already requires EC to use proper consultation processes and EC has a consultation protocol in place (paras 4 and 5).
Para 47 – Odyssey Proposes more innovative metering and load control initiatives.	Noted. Mostly the GPS focuses on objectives and outcomes. Detailed initiatives are a matter for the EC.
Para 48 –ENA Proposes addition of reference to market structures so that sentence reads "The Commission should promote pricing structures and market structures that can provide appropriate signals to manage these losses and constraints."	Disagree. It is unnecessary to refer to market structures in this context.
Para 48 – Odyssey Proposes a move from 11kV network to a new standard of 22kV network.	Noted. This is not a matter for the GPS.
Para 49 – ENA, Vector Proposes an additional sentence requiring the EC to consult with distributors.	Unnecessary because GPS already requires EC to use proper consultation processes and EC has a consultation protocol in place (paras 4 and 5).
Para 49 – Vector Should be further clarity around financial incentives for investment in electricity efficiency. Clarity would come from having a clear direction on how the EC and Commerce Commission should interact on the development of pricing methodologies.	Noted. The EC and CC are requested by the GPS (paragraphs 124/125 (now 118-119)) to do this.
Para 37 – ENA Proposes an additional sentence "These programmes should span New Zealand's economic activities, including the activities of all government agencies developing and implementing electricity dependent policies."	Unnecessary. Paragraphs 13, 14, 35 and 36 refer to the need to work with other agencies involved with energy efficiency and to the senior officials group that will coordinate the development of priority energy efficiency programmes.
Para 38 – EC, MEUG, Contact, Meridian, MRP It is important to have contestability in delivery of energy efficiency initiatives. EC must hold competitive tenders for any work it funds and EECA should only be appointed if it wins tender. Paragraph should be amended to emphasise that using EECA to help deliver work programme should be consistent with good procurement practice.	Agreed. It may not always necessary for EC to tender but EC must at all times follow good procurement practice and para 38 will be amended to make this clear.
Para 40 – ENA Proposes an additional sentence proposing the development of principles for differentiating purchases aimed at achieving government policy objectives which should be funded by government and purchases for the benefit of market participants which may be funded by levy.	Noted. The levy reimburses the Crown for the EC's costs in meeting its functions under the Act. The Act permits that the EC's functions may be carried out by contracting with other parties, although the EC remains accountable for spending of its appropriation. The EC's activities for which the costs are recovered from the industry must be in the EC's work programme – funding from the EC will be available for priority actions that appear in the EC's work programme.
Para 41 – MRP Reference to a detailed report that is not attached to the GPS is unhelpful. Suggests a reference be added.	Noted. Paragraph has been redrafted.
Para 41 – Vector Extreme caution should be adopted in using the KEMA report to underpin development of electricity efficiency activities.	Noted.
Para 41 – Odyssey KEMA report is adequate for determining best use of subsidy funds but in insufficient to determine how effective technologies will be in a normal business environment.	Noted.
Paragraphs 42/43 – Contact, MEUG, Genesis Concerned at use of 5% discount rate. Emphasis should instead be put on informing consumers of benefits of efficiency measures and lack of knowledge is a key obstacle to uptake.	Noted. GPS reflects NZES (p85) and NZEECS. EC only required to include an assessment using 5% and advise how this has been taken into account when assessing cost-effectiveness of programmes.
Para 42 – Odyssey A more flexible use of discount rate should be used.	Noted. GPS requires consideration of discount rate, but does not specify this as only rate.
Para 44 – EC, Meridian, IPENZ, Genesis This paragraph relating to EnergyWise Homes project is not necessary.	Agree. Unnecessary to specifically identify that project. Government policy objectives and outcomes for the EC are adequately covered.
Para 47 – ENA, Vector Proposes an additional sentence requiring the EC to consult actively with the wider electricity industry on proposals to promote demand side objectives rather than just the seeking the views of established wholesale market participants who will not necessarily welcome competition from the demand side.	Unnecessary because GPS already requires EC to use proper consultation processes and EC has a consultation protocol in place (paras 4 and 5).
Para 47 – Odyssey Proposes more innovative metering and load control initiatives.	Noted. Mostly the GPS focuses on objectives and outcomes. Detailed initiatives are a matter for the EC.
Para 48 –ENA Proposes addition of reference to market structures so that sentence reads "The Commission should promote pricing structures and market structures that can provide appropriate signals to manage these losses and constraints."	Disagree. It is unnecessary to refer to market structures in this context.
Para 48 – Odyssey Proposes a move from 11kV network to a new standard of 22kV network.	Noted. This is not a matter for the GPS.
Para 49 – ENA, Vector Proposes an additional sentence requiring the EC to consult with distributors.	Unnecessary because GPS already requires EC to use proper consultation processes and EC has a consultation protocol in place (paras 4 and 5).
Para 49 – Vector Should be further clarity around financial incentives for investment in electricity efficiency. Clarity would come from having a clear direction on how the EC and Commerce Commission should interact on the development of pricing methodologies.	Noted. The EC and CC are requested by the GPS (paragraphs 124/125 (now 118-119)) to do this.
Para 49 – Vector EC's role in relation to advanced metering should be to monitor progress rather than develop potential rule changes.	GPS requirement reflects NZES.
Para 49 – Vector Pleased to see acknowledgment of the role of the distribution sector in the demand side. There needs to be a clear interface between EECA, EC and Commerce Commission on how this can be achieved and to ensure consistency.	The GPS provides for EC to develop an MOU with EECA and Commerce Commission on their respective roles.
Para 49 – KCE If electricity efficiency is cost-effective why does it need support? The use of efficient and efficiently in the GPS is inaccurate as electricity is usually used at high efficiency even if the use is not effective for purpose.	Noted.

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Printed: 26/11/2009