The Electricity Authority (the Authority) should take careful note of warnings from Transpower with regard to proposed changes to transmission pricing.
The Transmission Pricing Group (TPM Group) says the Authority’s latest proposal is fundamentally flawed and should not proceed.
Transpower, the Government-owned entity that owns and operates our national electricity grid, is highly critical of the Authority’s proposal and have pointed out that it could lead to higher power prices.
The TPM Group agrees with Transpower’s submission that says the Authority’s changes are unlikely to be durable because they:
• consciously and deliberately encourage additional consumption during peak periods putting upward pressure on wholesale prices and causing more investment in gas-fired peaking generation, transmission and distribution
• provide commercial incentives for parties to withhold information from grid investment processes (ours and the Commerce Commission’s);
• result in major investment decisions being bogged down in private interests and disputes at the expense of security, reliability and wider economic and social wellbeing considerations (including responding to climate change);
• delay timely, efficient grid and low-emissions generation investment leading to higher electricity prices and greenhouse gas emissions;
• have a net result of higher overall electricity prices and elevated greenhouse gas emissions – a double blow for the New Zealand economy; and
• exacerbate the energy affordability problems afflicting too many consumers
“In other words, the Authority’s proposals run totally counter to the Government’s aims to lower power prices and increase renewable electricity generation,” the groups says.
Transpower also points out that incremental reform of the existing guidelines is the best option. They say:
“We reiterate that the problems the Authority has identified with the current TPM can be dealt with more quickly, more efficiently and more cost-effectively through incremental reform of the existing TPM and Guidelines. This approach would also carry a materially lower risk of unintended consequences.”
“It is extremely significant that the state-owned enterprise that will have the job of implementing the Authority’s proposed changes to the transmission pricing guidelines is so critical of them. Their concerns must be listened to by the Authority, with urgent Government action required,” says the group.
Note: The Transmission Pricing Group (TPM Group) consists of the EMA Northern, Horizon Networks, Federated Farmers (Auckland and Northland), Northpower, Norske Skog Tasman Ltd, Oji Fibre Solutions, Top Energy Group, Trustpower, Counties Power, Entrust and Vector.
A copy of the Transpower and other cross submissions can be found here: https://www.ea.govt.nz/development/work-programme/pricing-cost-allocation/transmission-pricing-review/consultations/#c18138