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Govt updates priorities for Electricity Commission

12 March 2008 Media Statement

Govt updates priorities for Electricity Commission

The government is improving the way the Electricity Commission monitors the country’s energy reserves.

“Energy security has always been a priority for the Labour-led government, and this move is part of making sure the electricity system is providing affordable and reliable electricity to businesses and consumers in an environmentally sustainable way,” Energy Minister David Parker said.

The changes are part of revisions made to the Government Policy Statement (GPS) on Electricity Governance, which is how the government sets objectives and outcomes for the Electricity Commmission.

The GPS is being updated to reflect the New Zealand Energy Strategy and New Zealand Energy Efficiency and Conservation Strategy, David Parker said.

“We’ve set a target of generating 90 percent of electricity from renewable sources by 2025, and we’re asking the Commission to look at how wind generation can best be integrated into the system, alongside geothermal and other forms of generation. This will include considering where grid upgrades are necessary to get renewable electricity from point of generation to where it is used.

“Reserve energy policy is also being updated. The previous reserve energy policy has served us well, as illustrated by the ability of the power system to cope with the recent unusual combination of circumstances. Nevertheless, there is room for improvement.

“The Electricity Commission carried out a comprehensive review of reserve energy policy last year, which has helped the government in making decisions to improve the way the Commission monitors security margins,” David Parker said.

The Electricity Commission and any other interested stakeholders now have until 4 April 2008 to make submissions on the proposed revisions. Written comments can be provided to

Information on the revised GPS for Electricity Governance is available from Background information on the Electricity Commission’s review of reserve energy and the government’s decisions on the review is available on the Electricity Commission and Ministry of Economic Development websites.

Highlights of the revised reserve energy policy include:

- A requirement for the Electricity Commission to continue to improve the quality of information it provides on security of supply, risk management and the actual level of risk.

- The ‘1 in 60 dry year’ standard for security of energy supply in the GPS is replaced by a ‘winter energy margin’ (margin between forecast capacity to supply in a mean hydro year and forecast demand) of 17 percent for New Zealand and 30 percent for the South Island. This new standard provides a similar level of security as the 1 in 60 standard, but is clearer and easier to calculate and understand.

- In addition to monitoring peak capacity, the Commission is required to develop a standard for ’peak capacity adequacy‘ – the ability of the system to supply electricity on those relatively infrequent occasions when demand for power is greatest (typically a few hours during the coldest days of winter).The Commission will be required to continue to closely monitor new generation build and security of supply projections and to make recommendations on policy responses, if required, to any identified systematic failure.


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