Country:New Zealand
Year:2010
Policy status:In Force
Jurisdiction:National
Date Effective:2010
Policy Type:Economic Instruments>Direct investment
Policy Target:
Agency:Energy Efficiency and Conservation Authority (EECA)
Legal References:Electricity Industry Act 2010; Electricity Industry (Levy of Industry Participants) Regulations 2010; Energy Innovation (Electric Vehicles and Other Matters) Amendment Bill
Funding:NZD 13 million for electricity efficiency programmes in 2015/16 (comprising business programme funding of NZD 7.6 million, products programme funding of NZD 4 million, and residential/lighting funding of NZD 1.4 million).
Evaluation:EECA reports to the Minister of Energy at the completion of each year on the outcomes of EECA’s levy-funded activities. It consults with industry each year before proposing an appropriation to the Minister of Energy – information on the latest consultation round can be found at http://www.eeca.govt.nz/about-eeca/consultations-and-rfps
Description:

The Electricity Industry Act 2010 (Act) allows for the collection of a levy on electricity retailers (who pass this cost on to both business and residential consumers), to promote and facilitate the efficient use of electricity.  The levy funds the cost of the Electricity Authority, which is the electricity industry regulator, and part of costs of the EECA in promoting electricity efficiency.  It is Section 128(3)(c) of the Act that provides for electricity levy part funding of EECA, to perform its functions and exercise its powers and duties in relation to the encouragement, promotion, and support of electricity efficiency. The portion of EECA’s overall costs that are met by the levy is determined by the Minister.

In recent years, the Minister has authorised EECA to call on the levy to fund $13 million of the costs of its electricity efficiency activities. The Act also requires EECA to consult on proposed appropriations for the coming year and report to the Minister on the outcome of that consultation. EECA uses the funding primarily across the business and residential sectors.

Since 2006, EECA’s levy-funded programmes have delivered national benefits at a total cost less than the marginal cost of new generation, and at a cost to the levy of less than two cents per kWh saved.  By the end of 2016/17, EECA is forecasting:    

  • cumulative annual savings of 2160 GWh
  • cumulative reduction in peak demand of 730 MW
  • present value of savings of around $1,270 million.  

In 2016, following the Government's announcement of an Electric Vehicles Programme (aimed to increase the uptake of electric vehicles in New Zealand - see separate entry), a discussion paper was issued that proposed options for the expansion of the purpose of one or more of the following existing levies; the Electricity Industry Participants Levy (the electricity levy), the Petroleum or Engine Fuel Monitoring Levy (PEFML), and the Gas Safety Levy (the gas levy).  The purpose of the expansion would be to allow EECA’s levy funding to form a pool of funds that can be used across EECA’s activities. This will allow EECA to recover from that pool or combined energy levy, funding for any of its functions relating to energy efficiency, energy conservation, and the use of renewable sources of energy, as opposed to just electricity efficiency - and this would include funding the Electric Vehicle contestable fund (see separate entry). The electricity levy already part-funds EECA (as above), the PEFML and gas levies were selected as candidates for expansion because they are levies on the two other most consumed forms of energy used in New Zealand, and the most relevant to EECA’s activities. The Energy Innovation (Electric Vehicles and Other Matters) Amendment Bill, designed to give effect to the above, has had its first reading in the House and is currently before Select Committee. That Committee is due to report back to the House in May 2017. 

Last modified: Thu, 11 May 2017 11:28:25 CEST