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solarcity / Unison complaint

This is a copy of the complaint, lodged by solarcity with the Electricity Authority, to register a breach of compliance by Unison Energy Limited.

Description of Circumstances

Background 

1. On April 1 2016, Unison Energy Limited (Unison) increased the lines charges on a kW/h basis for customers who have installed solar generation. 

2. The action of Unison, which may soon be followed by other lines companies around the country unlawfully penalizes solar generators. 

3. The result is that consumers will be dissuaded from putting solar on their houses as the economic returns are less beneficial. 

4. These actions are inconsistent with the recently signed Paris Agreement, which New Zealand has signed. 

Action 

The Authority must appoint an investigator under Regulation 12 of the Electricity Industry (Enforcement) Regulations 2010 (Regulations). 

Reasons 

A. The surcharge is a breach of schedule 6.4, Part 6 of the Electricity Industry Participation Code. 

B. Solar users are being wrongfully disadvantaged. 

Relevant Law 

1. Electricity Industry Act 2010 (the Act) 

2. Electricity Regulations 

3. Electricity Industry Participation Code 2010 (the code) 

4. Electricity Guidelines. 

Part 6 of the code sets out the rules relevant to the connection of distributed generation. 

Clauses 2 and 3 of Schedule 6.3 provides for notification of disputes and the process for progressing complaints. 

1. Clause 4 of Schedule 6.3 provides the Authority and the Rulings Panel must apply the pricing principles set out in Schedule 6.4 to determine any connection charges payable. 

2. Schedule 6.4 sets out the pricing principles to be applied for the purposes of Part 6 of the Code. Clause 2 provides that “Charges to be based on recovery of reasonable costs incurred by distributor to connect the distributed generator and to comply with connection and operation standards within the distribution network, and must include consideration of any identifiable avoided or avoidable costs”. 

3. Clause 2 goes on to provide that “subject to paragraph (i), connection charges in respect of distributed generation must not exceed the incremental costs of providing connection services to the distributed generation. To avoid doubt, incremental cost is net of transmission and distribution costs that an efficient distributor would be able to avoid as a result of the connection of the distributed generation

costs that cannot be calculated (eg, avoidable costs) must be estimated with reference to reasonable estimates of how the distributor's capital investment decisions and operating costs would differ, in the future, with and without the generation. (1) 

if incremental costs are negative, the distributed generator is deemed to be providing network support services to the distributor, and may invoice the distributor for this service and, in that case, the distributed generator must comply with all relevant obligations (for example, obligations under Part 6 of this Code and in respect of tax): 

if costs relate to ongoing or periodic operating expenses, such as costs for routine maintenance, the connection charge attributable to the distributed generator's actions or proposals may take the form of a periodic charge: 

after the connection of the distributed generation, the distributor may review the connection charges payable by a distributed generator not more than once in any 12-month period. Following a review, the distributor must advise the distributed generator in writing of any change in the connection charges payable, and the reasons for any change, not less than 3 months before the date the change is to take effect: 

4. These provisions are clear and unequivocal. connection charges in respect of distributed generation must not exceed the incremental costs of providing connection services to the distributed generation. There is no additional incremental cost in providing connection services to a household with solar generation. 

5. The surcharge must therefore be removed. 

Paris Agreement 

6. Under the recently concluded Paris Agreement, which New Zealand signed in April 2016, Parties have agreed to aim to reach global peaking of greenhouse gas emissions as soon as possible (article 4.1). The Agreement aims at holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change (article 2.1(a)). It is clear that limiting greenhouse gas emissions will require a massive shift toward renewable energies, as well as energy-efficient and climate-resilient systems. 

7. For these reasons, the Committee must appoint an investigator under Regulation 12 of the Electricity Industry (Enforcement) Regulations 2010 (Regulations). 

Footnotes

1) Clause 2 states that estimated costs may be adjusted ex post. Ex-post adjustment involves calculating, at the end of a period, what the actual costs incurred by the distributor as a result of the distributed generation being connected to the distribution network were, and deducting the costs that would have been incurred had the generation not been connected. In this case, if the costs differ from the costs charged to the distributed generator, the distributor must advise the distributed generator and recover or refund those costs after they are incurred (unless the distributor and the distributed generator agree otherwise).