WATCHDOG WRESTLES WITH NEW POLICY
4 March 2009
by Grant Bradley
Proposed changes to how the power sector is governed has the Electricity Commission wondering whether it will have to change its own rules to do part of its job.
The Government's draft policy statement on electricity governance is notable for eliminating the commission's involvement in many green energy programmes that had been required under the Labour-led administration.
The draft, released by Energy Minister Gerry Brownlee also deletes a previous reference to a commitment to 90 per cent of electricity to be generated from renewable sources by 2025. While National said before the last election it was supportive of the target, it also said it would not let it get in the way of security of supply.
In a bid to speed up work on the national grid under the new rules, Transpower will not have to seek commission approval for projects costing less than $20 million.
At present, Transpower has to seek approval for any projects over $1.5 million.
The policy document says that Transpower should submit upgrade plans to the commission for approval for smaller projects but then states it would not be required to assess and evaluate their merits.
Commission chairman David Caygill said he and his board would need to scrutinise the policy released on Monday.
``We will need to consider whether we will need to change any of our rules to meet this requirement.''
The bulk of its assessment and approval work was devoted to big projects, sometimes worth several hundred millions of dollars, he said.
The commission - which Brownlee has said contributes to duplication and delays - has two weeks to provide feedback.
Transpower yesterday said it welcomed any changes that would streamline the process of approving hundreds of smaller investments.
As part of $3.8 billion of spending on new equipment during the next five years, there are currently 233 projects in various stages of progress valued between $1.5 and $20 million, a spokeswoman said.
The draft policy will give the Government power to adjust the work of the commission without any law changes and is one of several documents that will feed into an overall approach to the energy sector.
NEW POLICY STATEMENT ON ELECTRICITY GOVERNANCE
Energy and Resources Minister, Gerry Brownlee, has today released for consultation a revised policy direction for the Electricity Commission.
The draft Government Policy Statement (GPS) sets out new objectives and outcomes expected from the Commission.
"The proposed changes are designed to reflect the new government's policies, and in particular its desire to accelerate prudent grid investment," said Gerry Brownlee.
"An important feature of the draft GPS is bringing forward the section that emphasises security of supply."
"The government believes that disentangling the regulatory overlap between the Electricity Commission, Transpower, and the Commerce Commission is important," he said.
"Getting that right will take some time. However, the government is taking this interim step with the GPS to ensure transmission investment can happen more quickly," Mr Brownlee said.
The draft GPS proposes a streamlined, simplified process for transmission investments under $20 million in value.
"Many projects are at risk from delay. This revised process would mean Transpower won't have to seek Electricity Commission approval for projects less then $20 million dollars."
"It will save time, costs, and speed-up important upgrade work," said Mr Brownlee.
"The regulatory function of the Electricity Commission was identified at the Jobs Summit by many sectors as delaying transmission investment and being a blockage to both infrastructure work and the expansion of jobs," he said.
Other changes to the GPS also reflect the government's intention to review the New Zealand Energy Strategy, and assess any duplication with the New Zealand Energy and Efficiency Conservation Strategy.
"We have allowed two weeks for the Electricity Commission and stakeholders to provide feedback. I appreciate it's a short time frame but the government regards improving our electricity grid as a priority," he said.
The Electricity Act requires the Minister of Energy to consult with the Electricity Commission on the GPS.
New Zealand Herald
(c) 2009 The New Zealand Herald
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