The Commerce Commission has given approval to Transpower, the operator of the national electricity grid, to spend $14.59 million in addition to the $36 million the Commission approved in March 2021 to upgrade its South Auckland network.

The further $14.59 million is an amendment to the Commission’s March decision and will cover the cost of replacing conductors on Transpower’s Otahuhu-Wiri transmission line and strengthening the towers and foundations required to support the new conductors. Transpower did not include this cost in the March proposal because it was still confirming its cost estimate for replacing the conductors.

Transpower had applied to be able to recover $15.8 million from consumers to complete the conductor replacements. After it subsequently confirmed that a more cost-effective means of replacing the conductors had come through testing and would be available for use, the Commission approved the lesser amount of $14.59 million as sufficient for the required work.

Commission Deputy Chair Sue Begg said the Commission’s role as a regulator is to ensure that Transpower invests efficiently in its transmission network for the long-term benefit of electricity users, without passing on unnecessary costs.

“Transpower made the case that the Otahuhu-Wiri line’s conductors needed to be replaced to ensure a reliable electricity supply in the region,” she said. “Our decision allows them to complete the necessary work using more cost-effective methods.”

Transpower’s grid investments are regulated under Part 4 of the Commerce Act

Transpower owns and operates the national high-voltage electricity grid, which moves electricity from where it is generated to where it is needed. Transpower recovers the costs of grid investment via transmission charges, which make up about 10% of an average consumer’s power bill.

The March approval to spend $36 million and this $14.59 million amendment to that approval are in addition to the annual base capital expenditure allowance (base capex) under Transpower’s individual price-quality path (IPP) for 2020-2025. The IPP is determined by the Commission under Part 4 of the Commerce Act and includes maximum revenues Transpower can make from transmission charges and the minimum quality standards Transpower must meet in supplying lines services.

At any time, Transpower can submit a major capital expenditure proposal (MCP) to the Commission seeking approval to invest more than $20 million in a project to enhance or develop the national grid that is in addition to work funded by the base capex under its IPP. 

If the Commission approves the proposal, Transpower can recover the costs from consumers as transmission charges according to the transmission pricing methodology (TPM) set out in the Electricity Industry Participation Code 2010.

The Commission's final decision can be found on its website.

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