More guidelines for decision-makers in the electricity sector

A new National Policy Statement on Electricity Transmission, an updated and revised Government Policy Statement on Electricity Governance, and a draft Grid Upgrade Investment Review Policy will provide the Electricity Commission, Transpower and other decision-makers with further guidance around electricity transmission and security of supply issues.

National Policy Statement on Electricity Transmission

The National Policy Statement (NPS) on Electricity Transmission took effect on 10 April 2008. It was developed as a result of the 2004 review of the Resource Management Act 1991 (the RMA) which found that lack of a clear statement on national interest on infrastructure led to insufficient weight being given to infrastructure of national significance in RMA plans and in local decision-making.

The NPS sets out the objective and policies for managing the electricity transmission network under the RMA with the overall purpose of making it explicit that electricity transmission, and the national benefits it provides, is a matter of national significance under the Resource Management Act.

The objective and policies are intended to guide decision-makers drafting plan rules, making decisions on the notification of the resource consents and in the determination of resource consent applications, and considering notices of requirement for designations for transmission activities.

For decision-makers under the RMA, the NPS is intended to be a relevant consideration to be weighed along with other considerations to achieve the sustainable management purpose of the RMA. However, the NPS is not a substitute for, nor does it prevail over, the RMA's statutory purpose or the statutory tests already in existence.

The government is currently also developing National Environmental Standards on electricity transmission to complement the NPS. The standards would do this by providing national consistency in how electricity transmission activities are managed, assisting councils in implementing the NPS rules, and providing for an increased national security of supply by protecting the national grid.

Government updates priorities for Electricity Commission

The Government Policy Statement (GPS) on Electricity Governance (dated October 2006) has been revised and updated following the recommendations of a Cabinet Paper and a public consultation on a Draft GPS on Electricity Governance. The amendments take into account the government's changes in its security of supply policy in the electricity market and also reflect the Electricity Commission's role under the New Zealand Energy Strategy and New Zealand Energy Efficiency and Conservation Strategy released at the end of 2007.

Under the new GPS the Electricity Commission will:

• take responsibility for how wind generation can best be integrated into the system, along with consideration of where grid upgrades are necessary to get renewable electricity from the point of generation to where it is used;
• replace the '1 in 60 dry year' standard for security of energy supply in the GPS by a 'winter energy margin' (the margin between forecast capacity to supply in a mean hydro year and forecast demand) of 17% for New Zealand and 30% for the South Island; and
• develop and set security standards for adequacy of capacity to meet peak demand.

The commission will also 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.

For further details visit the Ministry of Economic Development's website.

Grid Upgrade Investment Review Policy

The Electricity Commission has prepared a draft Grid Upgrade Investment Review Policy (GUIRP ) following a joint working group with Transpower set up in April 2007.

The GUIRP's purpose is to promote an effective process for the preparation of investment proposals by Transpower, as part of the company's wider grid-planning process, and the review and approval or rejection of those proposals by the commission. It provides a framework within which the commission and Transpower will interact during the process and provides guidance to interested parties on how Transpower and the commission will interact with them. However, since the GUIRP is only an operational policy and is not required by the Rules, the GUIRP will always be subject to any legislative requirements.

The Electricity Commission issued a consultation paper on the draft GUIRP:

• explaining the development of the GUIRP;
• setting out the purpose history and principles of the GUIRP; and
• seeking comments from interested parties on key aspects of the GUIRP.

Submissions closed on 5 May 2008 and it is expected that the GUIRP will be finalised in June.

Enquiries and information

For more information on any of the cases, articles and features in Commercial Quarterly, please email Diane Graham or call her on 64 9 916 8849.