4. Electricity efficiency
54. Electricity efficiency and demand side management help reduce demand for electricity, thereby reducing pressure on prices, scarce resources and the environment. The Commission should ensure that it gives full consideration to the contribution of the demand side as well as the supply side in meeting the Government's electricity objectives.
55. As part of its research and information activities, the Commission, in conjunction with EECA, has undertaken a comprehensive review of the potential of electricity efficiency to contribute cost-effectively to achievement of the Government's electricity objectives, including estimating the level of investment required to realise this potential. This work should continue.
56. A number of Government agencies have responsibilities that support improved energy efficiency in the stationary energy demand sector. These include EECA, the Commission, MED, MfE, MAF, DBH and Housing New Zealand Corporation. It is the government's intention that EECA be the primary service delivery agency for energy efficiency programmes in this sector.
57. EECA and the Commission have a common objective: to promote the use of electricity in an efficient and environmentally sustainable manner. In undertaking its electricity efficiency activities, the Commission should work closely with EECA. It is important that the Commission's activities complement the work of EECA and that duplication of effort is avoided. Through its membership of the Senior Energy Officials Group, the Commission will work with the group to develop priority energy efficiency programmes and will reflect this in its work programme to promote the efficient use of electricity.
58. EECA has expertise in the management of energy efficiency programmes. The Commission should draw on this expertise in designing, administering and delivering its programmes, and good procurement practice. This will promote concentration of expertise and coordination of effort. As EECA builds its capability in a wider range of areas, EECA will work as the delivery agent for more actions developed and funded by the Commission.
59. All purchases by the Commission of services from EECA should be formalised in contracts which should be made available on the Commission's website.
60. The Government notes that the two agencies have developed a Memorandum of Understanding outlining how they will work together. The Government requests that this memorandum be reviewed to clarify the respective roles of each agency and to reflect the arrangements above.
Other arrangements and programmes
61. The Commission should also put in place arrangements and programmes to promote efficiency in the following components of the electricity sector:
Generation
62. Hydro, thermal and other fuels resources should be used efficiently in the generation of electricity. Disclosure of information, such as the amount of and reason for hydro spill, is expected to help avoid unnecessary waste of resources.
Conveyance
63. Electricity should be conveyed efficiently on the national grid and distribution lines. Transmission and distribution companies should have 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
64. The Commission should promote and facilitate the efficient use of electricity by end users. It should pursue this objective in multiple and mutually-reinforcing ways, including:
- by 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 to respond to pricing incentives to use electricity more efficiently
- by facilitating the progressive introduction of advanced/smarter meters for consumers, through publishing technical guidelines, and reporting on the need for regulations by December 2009
- by encouraging and facilitating demand-side participation in the wholesale, distribution and retail markets
- by promoting the efficient use of load management.
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