In mid-2016 and again in early 2017, Venture Southland submitted on the Transmission Pricing Methodology (TPM) review carried out by the Electricity Authority.
The submissions were made on behalf of the region following discussions with key stakeholders including Invercargill City, Southland District and Gore District Councils, who all identified the issues raised in the review as an urgent priority for Southland.
The submissions highlighted that the current Transmission Pricing Methodology is not cost effective and adversely impacts on business competitiveness by imposing unreasonable costs on southern industries and consumers.
In terms of electricity infrastructure, Southland sits at the bottom of a long and thin electricity transmission grid but is close to significant sources of electricity generation. In fact, around 22% of all electricity generated in New Zealand is generated south of Cromwell.
Currently, however, regardless of location transmission costs are spread across all electricity users, with a bias against the South Island.
Since 2004, in excess of $1.3 billion has been invested in the upper North Island transmission assets, which has driven an increase of $220 million in Transpower’s annual revenue requirements.
Only 39% of the upgrade is being paid for by the upper North Island with the balance being paid by the lower North Island and South Island consumers. South Island generators also currently pay the whole cost of the Cook Strait cable.
In their submissions, Venture Southland identified that this arrangement is inequitable to South Island consumers and has discouraged investment in the development of new generation assets having an adverse impact on economic development.
Venture Southland also indicated that the current system of allocation does not meet the Authority’s statutory obligation as it is neither cost reflective, robust or able to drive efficient investment decisions.
Venture Southland believes that the implementation of a fair and equitable Transmission Pricing Methodology (TPM) is essential to ensuring Southland‘s high-value producers can remain competitive and is committed to advocating for a fairer method of allocation in the cost of New Zealand’s national grid.