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Investment in power grid urgent

Tuesday, June 27, 2006

Investment in power grid urgent but will the Electricity Commission allow it?

The Employers & Manufacturers Association (Northern) fully agrees with Transpower's chairman who said the June 12th black out in Auckland 'underlines the importance of having a robust, flexible National Grid to provide for the long term security of electricity supply, not only to Auckland but to all of New Zealand.'

But the question is: Will the Electricity Commission's grid investment test let Transpower get on and remedy our transmission deficit, asked Alasdair Thompson, EMA's chief executive.

"We are pleased Transpower has acknowledged the Otahuhu substation on which Auckland depends for its only power supply, is very old and uses old technology," Mr Thompson said.

"Transpower's maintenance programme was obviously ineffective as it did not identify that two 40 year old shackles had to be replaced.

"But the main issue is the long term underinvestment in the national grid, specifically to address the reliability of power supply to Auckland.

"We are encouraged Transpower believes best practice solutions to this will require multiple power supply points with the physical separation of lines supplying power from the substation to, around and beyond Auckland, and the need for urgency.

"But a large part of the urgent investment needed for the substation is part of the work needed on the new 400KV (or 220 KV) grid and it has to pass the Electricity Commission's grid investment test.

"The Commission has hitherto rejected the upgrade of the grid to Auckland, and to the Otahuhu substation, on economic grounds saying we can save on the cost of the capital required by building it later in 2017.

"We believe the reliability of power supply to Auckland, and our economic prospects, will be detrimentally affected if the new 400/220KV line is not built at the earlier date of 2011.

"We hope the Commission will review how it has applied its grid investment test on the grounds that it has not given sufficient weight to the risk involved.

"If we invest Just-in-Time as the Commission recommends, the risk is we will invest too late. Investing in the grid upgrade too late, if we get it wrong, carries a greater commercial risk than the extra cost from investing early."

ENDS

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