• Explanation of levy
  
• Levy rates

Reconciled levy rates 2008/09

The Commission has completed the annual levy reconciliation for 2008/09. The reconciled levy rates and information on the calculation process can be found at the link above. All levy payers received either a tax invoice or a credit note in the week ended 4 December 2009. Participants who overpaid 2008/09 levies received a refund by direct credit on 10 December 2009.

Indicative levy rates 2010/11

Indicative levy rates for the quarter ending 30 September 2010 are available at the link above. From 1 October 2010 the Electricity Commission will be replaced by a new Crown agency called the Electricity Authority.

Background

The Electricity Commission was established in September 2003 by the government to oversee and regulate the electricity industry and markets in accordance with the Electricity Act. Its primary duty is to ensure delivery of electricity to all consumers in an efficient, fair, reliable, and environmentally sustainable manner.

The Commission is funded by an appropriation from Parliament, recovered by a levy on the electricity industry. Different rates are levied on generators, retailers, lines companies, and the transmission operator, Transpower. Levy rates for these companies vary every year depending on the Commission’s expected annual costs, the allocation of those costs to its activities and the volume of electricity generated, purchased and conveyed and/or the number of consumer connections.

A large component of the Commission’s budget is spent on agreements with service providers, which are contracted by the Commission to carry out the operation of the electricity market. These agreements are with Transpower, which is contracted to manage the electricity system in real time, and with other companies that administer the electricity market. This spending by the Commission,  and other spending concerned with the management of the wholesale and retail markets, replicates that which was previously recovered from industry participants, through voluntary arrangements or through Transpower’s connection agreements.

Before the Commission was established, market administration and compliance costs were incurred and absorbed by the industry under self-regulation. Now that these costs are paid for by the electricity industry through a levy, they are more easily identifiable and transparent.

• consumer protection and enhanced retail competition;
• managing security of supply―minimising and managing risk of power shortages through the provision of reserve capacity and short-term demand management to overcome capacity constraints;
• transmission governance―developing a framework for Transpower’s planned $1.5 billion upgrade to ensure it is appropriate, robust and timely;
• demand and supply modeling―to support better market operation and capacity planning functions; and
• hedge market development―promoting transparent and liquid hedge markets, particularly those with limited physical cover.

The Commission does not directly charge its levy to end consumers. The net impact to consumers from the above levy changes will depend on each retailer’s consideration of these changes and how it may choose to pass on these changes to its individual consumers. 

For information about the levy amount included within your electricity account, please contact your retailer.