Electricity Efficiency
25. The Electricity Commission has as a key goal the efficient provision and use of electricity. 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 it gives full consideration to the contribution of the demand side as well as the supply side in meeting the Government's electricity objectives.
26. As part of its research and information activities, the Commission, in conjunction with the Energy Efficiency and Conservation Authority (EECA), should undertake 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.
27. The Commission should also put in place arrangements and programmes to promote efficiency in the following components of the electricity sector:
Generation
28. Hydro, thermal and other fuels resources should be used efficiently in the generation of electricity. Disclosure of information, such as on hydro spill, is expected to help avoid unnecessary waste of resources.
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.
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