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Electricity Crisis – A better demand side response

Media Release 12 June 2008.

Electricity Crisis – A better demand side response

The New Zealand Manufacturers and Exporters Association (NZMEA), is calling for a more strategic response to the issues we all face with the electricity system involving a clearly defined and programmed response to the domestic use of electricity to ensure that all users, domestic, commercial and industrial can respond to supply shortages.

“We have to address the speed of reaction on the supply side, but the demand side for residential and smaller commercial users also needs better signals and a retail offer that encourages a demand response. Simply looking to industry to make savings has a significant economic impact that might be avoided with the right signals to more users and that includes domestic users”, says Chief Executive John Walley.

Back in August 2006, the Association released its report, “How many more blackouts before we see the light?” that called for distribution and generation upgrades. The report concluded that the system was eroding the reserve margin and the Government and electricity sector was responding too slowly to match demand growth.

“Some changes have been made since 2006 with Transpower investing in distribution upgrades but generation is responding much more slowly and ever lower reserve margins are hampering supply. We need to do more on the demand side than look to industrial users to reduce demand; we need to encourage a residential demand side response. Retail users need price signals”, says Mr. Walley.

“Inadequate metering and wiring configuration in houses means that a demand side response is impossible for many users. If metering and wiring systems allowed for better monitoring and circuit switching for domestic users, then incentives such as reduced prices could be offered by electricity retailers enabling power consumption to be managed when necessary”, says Mr. Walley. “It would be a smart version of night rates and ripple control if you like”.

“More than half of the load is currently used by the residential and commercial sectors so we could all save a bit, or even a lot given the right incentives, and users like Rio Tinto could share the load as opposed to carrying it all”.

“Generally, a faster response that avoids being “just too late”, might happen if the representative cost of lost load were increased substantially beyond the $20k per MWh used in the modelling at the moment”.

“There is a need to move faster on the supply side to meet reserve capacity targets. However, we all need to be involved in the short term demand side response when ‘unexpected’ dry years happen”.


ENDS

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