Consultations

We have released a consultation paper on our review of the distributed generation pricing principles (DGPPs). The changes proposed in the paper will improve efficiency and competition for the long-term benefit of consumers.

In the paper, we propose to remove the DGPPs from the Electricity Industry Participation Code 2010 (Code). We propose that avoided cost of transmission (ACOT) payments should be made to distributed generators only when that provides benefits to consumers by reducing transmission costs.

We also suggest that distributors should set network charges for distributed generation using the same pricing principles they use for setting charges for other customers.

Under the current approach to ACOT, distributed generators are paid to operate to avoid transmission charges rather than to defer or reduce transmission investments and costs. This just leads to higher transmission charges on other distributors and their consumers, which is a ‘pass the parcel’ outcome that’s of no benefit to consumers overall.

We are proposing that Transpower reach individual agreements with distributed generators about the terms for ACOT payments if Transpower determines that a distributed generator reduces Transpower’s costs. Through their trial demand response regime, Transpower is making individual agreements with consumers to reduce demand or start up their own generation when called upon. Our proposal would put distributed generation on the same footing.

We consider that our proposal will not materially affect greenhouse gas emissions because 95% of consents for new electricity generation are for renewable sources of generation. Recently, about 80% of New Zealand’s electricity supply has been from renewable sources, and the same proportion has occurred for distributed generation. 

We are confident that our proposed changes will not adversely affect the reliability of the electricity system. 

The consultation paper seeks submissions on these issues from interested parties. 

Workings for CBA and financial benefits in Appendix D. 

Stakeholder briefing