Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Stoush brewing over radical electricity transmission scheme

Stoush brewing over radical electricity transmission charge scheme

By Pattrick Smellie

Jan 24 (BusinessDesk) - Major electricity users and most electricity companies are gearing up to challenge a radical new Electricity Plan changing the way they pay for access to the national grid.

Papers published on the EA's website show a combination of confusion and opposition to the proposals, which the industry regulator unveiled in October, cutting through more than a decade of unresolved debate about the fairest way to carve up the cost of transmitting electricity around the country.

The transmission grid is managed by the state-owned monopoly Transpower.

In particular, South Island generators Meridian and Contact Energy - more recently joined by Genesis since it was made owner of the Tekapo hydro scheme under reforms in 2009 - have objected to earlier arrangements which meant South Island generators bore the full cost of the Cook Strait cable link.

Now, however, state-owned Meridian appears to be the only electricity generator not actively contesting the EA's proposals, which the authority says will share the costs of national electricity transmission at a lower overall cost than under the current regime.

The issue is acute because heavy investment to upgrade the grid means the transmission component of electricity bills is forecast to rise by 79 percent over the next decade. Transmission currently makes up around 7 percent of the average household power bill, but will rise to around 10 percent over the next 10 years.

"The overall effect on households' electricity bills will be a minor reduction in electricity costs relative to what they would otherwise have been," the authority said when it released its proposals.

Economic benefits over 30 years were calculated at $173.2 million, against $49.3 million from the proposals favoured by a slender majority by aTransmission Pricing Advisory Group, which the EA largely rejected, the EA suggested.

However, alarm at the implications of the proposed new approach has already seen the EA set back the consultation deadline twice, by four months, to March 1, with some players saying even that is too short a timeframe.

"All participants and end customers have been struggling to understand this important new feature," the executive director of the Major Electricity Users Group, Ralph Matthes, said in a letter to the authority's chairman, Brent Layton, dated Nov 5.

A string of similarly worried submissions came from other large players, including TrustPower, MightyRiverPower, and the Consumers Institute, while Auckland network company Vector accused the EA of "inadequate process and information."

Vector claims the EA has failed to set out alternatives to prove its scheme is the best option, or what its impacts on prices to consumers will be, "including wealth transfers between suppliers and consumers."

"The Authority is in danger of concluding that the proposal is to the long term benefit of consumers even if consumers are made worse off," a Nov 13 letter from Vector chief executive Simon Mackenzie to Layton said. "We are very concerned that the current process falls short of any reasonable definition of good regulatory practice."

Matthes said MEUG members were viewing "with dismay" the impacts of the proposed changes, and suggested the EA had not understood them when they were first proposed.

TrustPower said their impact could be "tens of millions of dollars" annually and that the company had taken the unusual step of engaging international advisers on the complex plan.

MightyRiverPower, which is preparing for possible partial privatisation and will need to disclose material risks in a prospectus, warned the proposal "in its entirety … has very material implications for all generators and retailers."

That included MRP, "the one in five New Zealanders who are our customers, our geothermal joint venture partners, and New Zealand electricity consumers and participants in aggregate."

"The proposals also have the potential in our view to have adverse impacts on the wider economy," said chief executive Doug Heffernan in a Nov 9 letter to the EA.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news