Transmission Pricing Methodology Ready For Consultation

The Electricity Authority has started consulting on a proposed new Transmission Pricing Methodology (TPM). The consultation period will run from 8 October for eight weeks, with events being held around the country to ensure the Authority can continue to inform and engage with interested parties.

"The proposed new TPM better positions New Zealand to transition to a low-emissions economy by ensuring the best use of existing and future electricity infrastructure," says Rob Bernau, Director Network Pricing at the Electricity Authority.

"Transmission pricing matters. It costs New Zealanders $800m each year, and influences how we invest in and use the national grid. The Authority believes it is critical that transmission charges are efficient, and more closely reflect the actual cost of delivering electricity to household consumers and large industrial customers," says Rob Bernau.

"It is widely agreed that the current TPM is no longer fit for purpose. It unnecessarily requires some consumers to pay a premium when power is most valuable to them, even when the grid has spare capacity. It encourages parties to invest in generation and emerging technologies simply to shift costs on to other consumers, who end up paying more for their electricity than they need to. This will only get worse as new technology gets cheaper.

"It is important to New Zealand’s future that we have a new TPM that supports the electrification of transport and industrial processes at the least cost to New Zealand consumers. The national grid has a key role to play as we transition to a low-emissions economy," says Rob Bernau.

The Authority acknowledges Transpower’s role in developing the proposed new TPM. "We appreciate the substantial and sustained effort Transpower has put into developing the proposed new TPM which, in our view, is reflected in the high quality of the product," says Rob Bernau.

The proposed new TPM and accompanying consultation documents are available on our website, along with a short guide to the TPM.

Notes:

- The Electricity Authority is an independent Crown Entity with a statutory objective to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers.

- Transmission refers to the transport of electricity around the country, via the national grid, to local distributors. Transpower owns the grid and transmission charges for customers are determined by the TPM. Transmission charges make up approximately 10 per cent of the average consumer’s total power bill.

- The Authority amended its TPM guidelines in 2020 after extensive review and consultation. Transpower then drafted a proposed new TPM, and this was delivered to the Authority on 30 June 2021. The Authority has accepted the vast majority of Transpower’s proposal, but has made some specific, targeted changes.

- The Authority is proposing that new transmission pricing come into effect on 1 April 2023, but there are still several steps remaining in the process which could impact on this.

- TPM events during the consultation period will be held around the country, if COVID alert levels allow them to be, to ensure the Authority can continue to inform and engage with interested parties. Details are as follows (timing TBC):

o Monday 1 November: Wellington

o Tuesday 2 November: Wellington (detailed technical event)

o Wednesday 3 November: Auckland

o Thursday 4 November: Whangarei

o Friday 5 November: Tauranga

o Monday 8 November: Christchurch

o Tuesday 9 November: Invercargill

- Please register your interest for a TPM event by emailing TPM@ea.govt.nz with your preferred location and your full contact details. More details on the events will be available soon, so please read future editions of the Market Brief newsletter for updates.

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