Parliament's environmental watchdog has called for a radical democratisation of the electricity sector and says the Government needs to provide it with a clear, long-term strategy.
"The supply of electricity services has too many monopoly elements ...all aspects of supply and use need to be democratised," the Parliamentary Commissioner for the Environment, Morgan Williams, warned today.
"With the right policy settings, people would embrace the change.
"Energy policy in recent years has tended to be short-term and crisis-driven, particularly around security of supply."
The nation's energy future lay in smart thinking and making better use of the electricity which was generated, but "at the moment, the big players, who favour building more big projects to generate more power dominate industry thinking".
Dr Williams today delivered a report, Electricity, Energy and the Environment to Parliament which called on Energy Minister David Parker, to develop an "over-arching" energy framework policy process based on the Government's sustainable energy work.
This needed to set out goals and how they could be assessed and implement, integrate both state-owned and private sector companies, and address conflicts between different energy policies.
It should take into account future generations.
Dr Williams said he would soon report on the potential for greatly expanding small-scale distributed generation and energy "capture" and in today's report endorsed approaches such as the NZ WhisperGen electricity generators driven by waste heat from household water systems, and Swift rooftop wind turbines from Scotland.
The implications of climate change were enormous, but between 1990 and 2005 carbon dioxide emissions from NZ electricity generation jumped 80 per cent.
He quoted a Time magazine headline -- Be Worried, Very Worried -- in calling for electricity generation in New Zealand to be "decarbonised" as quickly as the depreciation of assets allowed.
"We are entering arguably the most turbulent period in human history," he said. It was imperative that the nation's electricity operations boosted their efficiency, and that the resilience of the system was hardened to withstand whatever the future held.
Dr Williams set out another half-dozen recommendations each for the Government and its Electricity Commission.
"The Government has a responsibility to outline a clear view of where we are headed, and the Electricity Commission needs to put that into practice," he said.
In addition to taking account of all energy resources and fuels, and highlighting the linkages between electricity, gas and coal, the policy framework would have to say how to reduce carbon dioxide emissions from the electricity sector.
"At present, this goal is being compromised to ensure security of electricity supply," he warned in the first full-year assessment of the Electricity Commission and the wider electricity sector.
Though the commission was asking the right questions and making good progress on energy efficiency, it had still not developed an environmental sustainability framework.
"We don't know how they make the decisions that affect the environment, what criteria they use, or how the sector will achieve the Government's environmental aims," he said.
The focus on security of supply was placing pressure on the environment, even though large-scale energy projects were increasingly being opposed by local communities.
Importing liquified natural gas to make up for the failing Maui supplies would increase exposure to volatile energy prices offshore and affect energy security and self-sufficiency.
"Longterm, there are no guarantees that New Zealand will have affordable access to overseas natural gas supplies," he said.
Proposals for new coal-fired power stations appeared to undermine government attempts to stabilise greenhouse gas emissions. By supporting Mighty River Power's plans to fire up Marsden B power station on coal, the Government appeared to place short-term economic benefit over environmental sustainability.
Dr Williams called for the Electricity Commission to encourage the widespread use of "smart" electricity meters which tell households how much electricity is costing them at different times of the day, to enable people to reduce demand at peak periods. He also wanted better representation of consumers on the commission's advisory groups, and advocacy for reducing demand rather than just boosting electricity generation.
"The huge potential for improved energy efficiency remains largely untapped," he said.
Lines companies and other distributors should have incentives to reduce energy losses from their networks.
Environmental reporting was fudged by most major generating companies, and needed to improve, and the Government needed to sort out overlaps between its Ministry for Economic Development, the Electricity Commission, the Environment Ministry and the Energy Efficiency and Conservation Agency.