NZ lines companies lobby to build power plants

NEW Zealand’s 28 electricity lines companies want to be allowed to build power plants that will help the country’s power supply, relieve transmission problems and bring more competition to the wholesale electricity market.
NZ lines companies lobby to build power plants NZ lines companies lobby to build power plants NZ lines companies lobby to build power plants NZ lines companies lobby to build power plants NZ lines companies lobby to build power plants

The Electricity Networks Association said it was surprised energy, particularly electricity issues, have largely been ignored so far in the lead-up to the September 17 general election.

“Given the challenges presented by record oil import bills, dwindling gas supplies, Kyoto undertakings, grid upgrades and sluggish generation investment, this may be surprising," ENA chief executive Alan Jenkins said.

“Political parties show little inclination to look beyond the mantra that lines companies must be regulated because they are natural monopolies, while generators’ and retailers’ prices are supposedly controlled by competition.”

This probably meant the continuation of price control for network companies, despite the virtually flat lines charges since 1998, and no regulation for generators -retailers whose charges were increasing “faster than the price of petrol”.

Local lines and national transmission grid charges had remained virtually unchanged. But other energy costs had increased by 60%, so nominal electricity prices had increased by over 30% since 1999.

Baseline electricity demand had increased by over 11% since 1999, as had the highest weekly consumption. Summer loads were increasing at faster rates than winter loads and South Island centres faster than North Island ones.

“We are sailing very close to the wind in terms of reaching our generation and transmission capacity limits," Jenkins said.

"Sustained years of above-average demand growth, and even days and weeks of record-breaking demand, could yet push us into blackout territory.”

The ENA wanted the Electricity Industry Reform Act, which prohibits lines businesses owning any significant generation, amended. At present lines companies were only able to retail less than 10% (or 25MW) of electricity.

Jenkins said the Ministry of Economic Development was starting to look at ways of allowing lines companies to be involved in significant “distributed generation” – power stations built close to electricity loads using local hydro, geothermal, gas or wind energy.

Hastings-based Unison was already testing the EIRA legislation by seeking resource consents for its proposed 48MW wind farm as it would need a Commerce Commission exemption from the act for the project to proceed.

As well, lines companies needed to be able to trade in hedge contracts to back up the variability supply from such small wind farms. But there was no certainty big generating companies would be willing to sell hedge contracts to network companies they viewed as competitors.

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