Electricity Industry Reform Act Amendment

In September 2008, the New Zealand Parliament amended the Electricity Industry Reform Act of 1998 (EIRA). While generally requiring separation of monopoly electricity lines and competitive generation and retailing business, the amendment creates more favourable conditions for electricity generation using renewable energy resources. The amendment seeks to encourage lines companies to invest in permitted generation, particularly renewable generation. While electric lines companies are already able to own some types of renewable generation in unlimited quantities, the new legislation widens the definition of renewables to encompass geothermal, wind, hydro and others. This is intended to facilitate investment by local lines companies in some of the smaller projects that are not of interest to the larger generators. A line company can also sell the results of renewable energy generation in any region outside of its lines area, without restriction. It need not comply with the arms length separation rules provided that the generation is not connected to its lines. In addition a lines company may invest in "new" (ie. generation commissioned after 8 August 2001) renewable generation which is connected to its lines, of any size. This renewable generation does not count towards the lines companys connected generation cap. This also applies to generators that are partly renewable and partly fossil fuel based, provided that fossil fuels provide no more than 20% of the fuel for the generator in any 12 month period. The lines company may sell this electricity to the customers within its lines area. The amendment to the EIRA is intended to contribute to New Zealands target of generating 90% of its electricity from renewable sources by 2025.

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