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Audrey Van Dalen
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Consultation Paper - Transmission Pricing Methodology: options paper
Tuesday, 11 August 2015 2:36:35 p.m.
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High
11 August 2015
Submission by the Rt Hon Winston Peters MP
Leader of New Zealand First
Member of Parliament for Northland
Electricity Authority’s Long Running TPM Review sells out regional New Zealand
The Wellington based Electricity Authority’s (Authority) proposal to change Transpower’s
pricing methodology (TPM) will artificially increase electricity bills in provinces by the
geographical accident of not being next to a power station. By the Authority’s own forecasts, electricity users living in Northland (Kaitaia, Kerikeri and
Kaikohe and surrounding areas) will have a 172% increase to their contribution to national
grid charges. [1] The reason for such changes is equally absurd given the Authority’s “beneficiary pays”
philosophy for redesigning the TPM. This penalises energy users for the simple fact that
they live in Northland, Auckland or the South Island’s West Coast. Of deep concern is the
lack of flexibility given it is not unfeasible new technologies will emerge, such as proposals
for tidal power or micro-generation. The TPM locks in structurally high line charges to
cross subsidise large power users.
This is a clear case of a regulator being successfully persuaded by sectional interests. It is hard to fathom why the Authority is acting in accordance with its mandate to the
benefit of consumers, given the biggest “winners” from the proposed changes are large
profitable generators and some of New Zealand’s largest energy intensive businesses
(mostly foreign owned). By the Authority’s own estimate some generators will save up to
$50 million dollars [2] a year from the proposed changes while large industrial users will
avoid paying in aggregate 88% [3] of their current annual contribution to the national
grid. The Authority’s long running review of the TPM dragging on since 2012 is a clear case of
regulatory overreach. It highlights a regulator pontificating in its Wellington ivory tower
over different academic literature for a justification to redesign the TPM. It is also shows
how a Wellington regulator can manipulate its statutory power to the detriment of New
Zealand’s least resourced person, regional New Zealand electricity users. RECOMMENDATIONS
§ That none of the options in the TPM are acceptable or fair.
 The after tax profits of state-owned Transpower ($73.8 million in just the six months to 31 December
2014), be instead used to smooth electricity line charges.
 That the Electricity Authority itself be reviewed given 41 staff earned over $100,000 in the 2013/14
Financial Year with the Authority’s chair, Dr Brent Layton, earning $437,000 in the financial years
2012/13 and 2013/14.
Rt Hon Winston Peters
NZ First Leader
MP for Northland
Spokesperson for l Economic Development/Finance /Foreign Affairs/Immigration/Racing/Senior Citizens and Superannuation l Tel
+ 64 4 817 8354 l F + 64 4 817 6491 l [email protected] l Level 13; Bowen House; Freepost Parliament
Buildings; Private Bag 18-888, Wellington 6160/www.nzfirst.org.nz
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[1]
Electricity Authority, Transmission Price Methodology Review: TPM options working paper, p128 table 15a
[2]
Electricity Authority, Transmission Price Methodology Review: TPM options working paper, p129 table 15a
[3]
Electricity Authority, Transmission Price Methodology Review: TPM options working paper, p129 table 15a