Commerce Commission Should Choose Its “Highly Ambitious” Option For Energy Efficiency In Its Draft Decision

The Commerce Commission deserves credit for announcing a new initiative which it says will encourage energy efficiency, but needs to go further.

Energy efficiency expert Dr Chris Mardon welcomed the announcement in the draft electricity price-quality path determination that lines companies will be allowed to spend up to 0.6 percent of their revenues on “innovation and non-traditional solutions”, including energy efficiency projects.

However, Mardon said the 0.6 percent allocation is miniscule compared to the $12 billion greenlighted for the 16 largest lines companies to spend on new poles and wires from 2025 to 2030.

“The Commission is sending a message to lines companies that’s it’s okay to build more poles and wires and send higher bills to consumers, while investing only a little bit or nothing in energy efficiency to reduce their bills.”

Mardon strongly encourages the Commission to go with its “highly ambitious option*” of allowing lines companies to spend up to 5 percent of their revenues on initiatives like energy efficiency, which would provide sufficient incentives to support more ambitious or transformational initiatives.

“This level of funding applied to the most cost-effective energy efficiency options would save New Zealand consumers hundreds of millions of dollars per year on their power bills”.

Mardon also said that at least half of the allowable new innovation and non-traditional solutions spending should be ring fenced for energy efficiency, which lowers the amount of power used, reduces peak loads and carbon emissions, and avoids network expenditure, rather than for other “non-traditional” investment.

“Otherwise lines companies will spend the new allowance on high-tech devices and systems to aggregate and control devices such as EV chargers and hot water cylinders to shift peak load, because this investment adds to their regulated asset base, raises future profits, and can generate income,” he said.

*[1] Commerce Commission draft Default price-quality path for EDBs from April 2025. Reasons paper, p280

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