Transpower takes swipe at NZ power regulators

TRANSPOWER chief executive Ralph Craven, whose company owns and operates New Zealand’s national grid, told the National Power Conference in Auckland yesterday that Transpower was not opposed to a fair and reasonable regulatory regime.
Transpower takes swipe at NZ power regulators Transpower takes swipe at NZ power regulators Transpower takes swipe at NZ power regulators Transpower takes swipe at NZ power regulators Transpower takes swipe at NZ power regulators

However, regulators were currently regulating each another, he said, referring to the Electricity Commission, which has oversight for the power industry, and competition watchdog, the Commerce Commission.

The Commerce Commission has declared its intention to impose price control on Transpower for alleged excessive price increases Transpower proposes as part of its planned central North Island grid upgrade to cater for booming greater Auckland power demand.

The commission has said it expects to announce its decision by the end of this month.

Craven denied Transpower was making excessive profits, saying its pricing methodology target zero excess returns over time.

He said there had been no proper analysis of Transpower’s costs and that the Commerce Commission had overstated the alleged benefits of price control.

If Transpower was not allowed to fully recover its costs then its capital expenditure would decrease, reliability of electricity supply would decrease, though its debt servicing costs would increase, as would costs to consumers, he argued.

Craven also challenged alternatives offered by Electricity Commission chairman Roy Hemmingway earlier that involved delays implementing its proposed upgrades by 10 years or longer.

Transpower’s two main projects are the upgrading of the Cook Strait cables and the upgrading of the Whakamaru-Auckland part of the national grid. There are also smaller upgrades planned for various parts of Auckland.

Transpower needed to make decisions on its two major projects by the middle of this year so it could ensure upgrading was completed within the next five or six years, according to Craven.

He said any delays to those deadlines meant load shedding with some Auckland customers losing power briefly, and changed contractual arrangements with industrial/commercial customers would be necessary to reflect the less secure and changed operational environment.

A speedy resolution of these issues had now become critical, Craven said.

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