Energy Policy Framework
[ Last Updated 21 November 2005 ]
Overall Energy Policy Objective
The Government is committed to a sustainable and efficient energy future.
Within this commitment, its overall objective is to ensure the delivery of energy services to all classes of consumer in an efficient, fair, reliable, and sustainable manner.
The overall outcomes the Government seeks are:
- environmental sustainability, including continuing improvement in our energy efficiency and a progressive transition to renewable sources of energy
- costs and prices to consumers which are as low as possible, while ensuring that prices reflect the full costs of supply including environmental costs
- reliable and secure supply of essential energy services
- fairness in pricing, so that the least advantaged in the community have access to energy services at reasonable prices
- continued public ownership of publicly owned assets.
The Government intends to:
- put policies and programmes in place to achieve these objectives
- monitor energy developments closely to ensure that these objectives are being achieved
- ensure that ongoing reforms, such as the electricity reforms:
- are fully consistent with achieving the above outcomes
- do not foreclose on options for enhanced achievement of these outcomes in the future
- make use of industry solutions where possible and regulation where necessary
- ensure that the Government retains the ability to ensure that its energy objectives are achieved. Government programmes and policies to achieve its energy policy objectives
The Government's Policies and Programmes Relating to Energy Include:
Energy Efficiency and Renewables
- development of an Energy Efficiency and Conservation Strategy under the Energy Efficiency and Conservation Act by October 2001
- establishing the Energy Efficiency and Conservation Authority (EECA) as a stand-alone Crown entity, as at 1 July 2000
- significantly increasing funding for EECA to improve its capacity to deliver high quality programmes to improve energy efficiency and the use of renewable energy across all sectors of the economy
- developing consumer labelling and upgrading energy performance standards for buildings and appliances
Climate Change
- a commitment to pass legislation to enable New Zealand to ratify the Kyoto Protocol on climate change by mid 2002
- development of a comprehensive range of policy measures to ensure that New Zealand is able to meet its commitments under the Kyoto Protocol
Electricity Reforms
- ensuring an efficient electricity market by providing for industry self-governance arrangements, subject to clear guiding principles set out by the Government and backed by the ability of the Government to regulate to put in place better arrangements if necessary
- ensuring environmental objectives are met by:
- requiring disclosure of hydro spill
- requiring market rules to be consistent with Government policies on energy efficiency and climate change
- requiring market rules to promote demand-side participation and facilitate renewables
- requiring transmission and line pricing methodologies to signal losses and constraints so as to encourage the optimal mix of demand and supply side responses
- enabling lines companies to build small scale distributed generation to minimise transmission losses and overcome capacity constraints
- requiring the development of model use-of-system agreements covering, inter alia, the connection of distributed generation to lines
- ensuring secure supply by providing for:
- a stable and efficient regulatory environment which ensures investors can build new capacity with confidence
- disclosure of forward price signals on the need for new capacity
- institutional arrangements which ensure that new investment in the grid takes place when required
- requiring publication of short, medium and long term forecasts of system adequacy
- requiring lines companies to maintain existing lines (currently until 2013) and to publish asset management plans
- ensuring fair prices and protecting the interests of residential consumers by:
- requiring all retailers to provide a low fixed charge tariff option to all consumers
- ensuring effective competition in retailing by requiring prompt switching of customers between retailers
- requiring the establishment of an "ombudsman" scheme to ensure proper handling of consumer complaints
- ensuring consumers are well-informed through upgrading the PowerSwitch information service currently operated by the Consumers Institute
- retaining the ability to control line charges to rural consumers (both domestic and non-domestic), if required
- requiring the development of model consumer contracts
- including electricity (and gas) in the Consumer Guarantees Act
- requiring retailers to offer pre-payment meters at reasonable prices
- ensuring best possible prices and service from line companies, which are effective monopolies, by:
- putting in place a credible and robust price control regime operated by the Commerce Commission
- requiring the Commerce Commission to recalibrate asset valuations, and to mandate asset valuation methodologies
- strengthening comparative competition by introducing higher quality information disclosure and analysis through the Commerce Commission
- maintaining public ownership of Transpower and the three state-owned generators, and ensuring that industry self-governance arrangements do not foreclose any reconfiguration of Crown owned assets
- closely monitoring outcomes and performance by requiring regular reports from the industry and evaluating the effectiveness of the regulatory regime
Gas Sector
- upgrading the information disclosure regime by introducing tougher disclosure and asset valuation rules
- maintaining a close watch on the sector to ensure that prices are efficient and that gas is not used wastefully
- note: policies on gas are subject to further development to enhance competition, increase pressure on prices and ensure that gas is used efficiently
Transport Sector
- recognising that transport is the largest and fastest growing source of energy demand in New Zealand
- implementing a Vehicle Fleet Emission Control Strategy, primarily to improve local air quality, while also supporting fuel efficiency and reducing greenhouse emissions
- ensuring that future transport policies are developed with greenhouse gas abatement as a high priority including an increased focus by EECA on promotion of more efficient and sustainable transport options
- developing proposals to foster deployment of more eco-efficient vehicles
- note: policies on transport are subject to further development to promote the use of public transport and more fuel efficient vehicles to tackle the current trend of increasing use of petroleum products.
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