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Nothing Has Changed in Latest TPM Rewrite

16 December 2016

Nothing Has Changed in Latest TPM Rewrite

Vector Chief Executive, Simon Mackenzie, says nothing has changed with the Electricity Authority’s latest Transmission Pricing Methodology proposals. The changes will mean a 33 per cent per annum increase in Auckland’s transmission grid charges.

“It’s hard to reconcile how the EA can continue to support a system where large generators, who benefit significantly from the grid, only pay less than 10 per cent of the costs. It basically leaves everyday users across the country bearing an even heavier burden while the generators make windfall gains,” says Mr Mackenzie.

“The EA talking about a 3.5 per cent cap on electricity bills actually masks the fact there will be a substantial increase in the transmission cost component. Based on current charges it would essentially be a 33 per cent increase for Auckland’s network. We would have expected more transparency on the real impact of these changes.”

Mr Mackenzie has concerns about the EA making predictions in areas outside its jurisdiction. “Tying these proposals to uncertain price resets by the Commerce Commission is a huge risk, not to mention the comments are highly market sensitive.

“We’re standing with a dozen other entities across the country who struggle to see how this will result in better outcomes for New Zealanders. I assume electricity retailers will be equally concerned for their customers and look forward seeing them also taking a strong stand.”

Mr Mackenzie has added his disappointment with the EA’s criticism of Vector’s calculated customer impacts. Vector has explained to the EA that instead of using the regulator’s simplistic averages, it uses a far more cost-reflective method - something the EA itself has been actively encouraging within the sector.


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