Meridian misgivings on Electricity Commission

Media Release

For immediate release Wednesday October 11 2006

Meridian expresses misgivings on Electricity Commission

The Electricity Commission has failed to secure the full confidence of the electricity industry in the past two years, says Meridian Energy chief executive Keith Turner.

In comments contained in Meridian's Annual Report tabled in Parliament today, Dr Turner says some of the commission's decisions have been based on a rather narrow view of its governing policy and rules.

In particular there was a glaring inconsistency in its decision on the allocation of high voltage direct current (HVDC) charges for the Cook Strait cable.

"For charging purposes the commission holds this to be a 'connection asset' to be paid for by South Island generators who must also fund 100 percent of the planned HVDC upgrade."

This was despite the fact that in the year ended June 2006 more power flowed to the south, showing the true national nature of this part of the grid.

"Yet the commission has also treated the HVDC as an 'interconnection asset' for its benchmark contracts. On the one hand therefore, it charges its cost as though it is a connection asset, but on the other it contracts it as an integral part of the national grid and national electricity market."

Dr Turner says the revised Government Policy Statement issued in August established industry priorities in the best interests of all New Zealanders, and clarified the role of the Electricity Commission.

The GPS stressed the importance of security of electricity supply, a robust national grid, and the role of renewable fuels in meeting New Zealand's future electricity demand.

In light of the revised statement, Meridian now looks forward to a new era of decision-making by the industry regulator, Dr Turner says.

ENDS

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