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 following discussions with a range of stakeholders who all identified the issue as an urgent priority.
Currently, 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 (61%) being paid by the lower North Island and the South Island consumers. South Island generators also currently pay the whole cost of the Cook Straight cable. This arrangement is inequitable to South Island consumers and has discouraged investment in the development of new generation assets. These additional costs have also had an adverse impact on the competitiveness of the industry and economic development investment.
The current system of allocation does not meet the Authority’s statutory obligation as it is not cost reflective and does not drive efficient investment decisions. The current pricing methodology is neither robust nor durable as the cost of network improvement is not born by those who benefit from such investment and therefore is a disincentive for efficient investment in the grid.
The implementation of a fair and equitable Transmission Pricing Methodology (TPM) is a critical factor in ensuring that Southland‘s high value producers can grow production and remain competitive within a fast changing global economy.
Venture Southland has proactively embraced a considered and well thought-out approach to energy related matters and, in 2003, Southland became the first region in New Zealand to establish a Regional Energy Strategy.
Advocacy for better pricing is ongoing.