http://www.stuff.co.nz/inl/index/0,1008,567680a13,FF.html

Huge power hike likely for some east coast towns

29 DECEMBER 2000

Thousands of electricity consumers in Dannevirke, Central Hawke's Bay, Wairoa and Gisborne are to be slugged by increases of up to 50 per cent by national lines company Transpower because they are at the end of the line.

Gisborne and Wairoa consumers will be the first to feel the effect of Transpower's new user pays pricing policy when it comes off its existing contract on April 1.

The new pricing, which Eastland Network chief executive Ken Mitchell says penalise Transpower customers connected to spur lines, will take effect over two years.

They will hit electricity consumers in Central Hawke's Bay and Dannevirke from Apri1, 2002.

For Gisborne and Wairoa consumers the Transpower component of their electricity bills will rise by up to 39 per cent. Centralines' Central Hawke's Bay customers face a 17 per cent increase while in Dannevirke those connected to the Scanpower network could face rises as high as 50 per cent.

Mr Mitchell said Transpower's new pricing model would add eight per cent to the average Gisborne and Wairoa consumer's electricity bill if it was passed on.

He said the new charges were totally unjustified and were sending the wrong message to people living in the area.

"We are being penalised for being connected to a spur line," he said.

Gisborne and Wairoa draw their power supply from the Lake Waikaremoana hydro scheme.

"Gisborne is 90km away from Lake Waikaremoana and we are being told to pay $6.5 million annually in transmission costs on a lines asset valued at $30 million."

He said the new charges were totally unacceptable and Eastland was doing everything it could to have them reviewed.

The new pricing structure was a disaster to regional economies.

Mr Mitchell asked how Gisborne industries could compete against Hawke's Bay. Gisborne gets a large power price increase while Hawke's Bay gets a reduction. It was so unfair.

"It makes you think that everyone should move to Auckland, Wellington and Christchurch," he said.

Scanpower chief executive Jeff Farnworth said Transpower had indicated it would be increasing its line charges by 50 per cent when Scanpower's existing contract expired in April 1, 2002.

He said his company was negotiating with Transpower now and hoped to finalise negotiations by July.

The southern Hawke's Bay area was served by a spur high tension line from Bunnythorpe, near Palmerston North.

Gary Sturgess, of Central Lines, said Central Hawke's Bay consumers faced a 17 per cent increase in Transpower charges. Its main connection to the Transport grid was at the Redcliffe substation near Napier though it was also connected to Bunnythorpe.

He was not concerned about the increase at the moment because Centralines had 15 months of its existing contract to run.

Meanwhile, Hawke's Bay Network customers face a reduction in their power bills because Transpower is reducing its line charge to the company by an average of 14 per cent.

Transpower's reduction will save the Hawke's Bay region $2 million, equating to an annual saving of about $32 for the average urban consumer. – NZPA

-- (in@energy.news), December 31, 2000

Answers

Its nice to know that we are not the only people being gouged.

-- Mother of Jehosophat! (for@cryin'.outLoud!), December 31, 2000.

There is a bit of sensationlism and inaccurate reporting in this story. Yes, prices will increase for some consumers including myself, but not to the extent being suggested here.

The electricity industry in NZ has four components, the Generation Companies, Transpower (the National Grid operator), Local Lines Network Companies, and the energy Retailer. Generators are permitted to be retailers as long as they are not monopolies, but generators and retailers are not permitted to own or operate lines.

Thus when we pay for our power the cost is split by the retailer into these four sectors. If any one sector such as transpower raise their charges 50% then this would flow on as a 12.5% increase into the final power account.

Transpower are the government owned operators of the high voltage National Grid network, and they are only concerned with lines of 110KV or higher. With the exception of a few spur linesa they are also only concerned with the main trunk service running the length of the country connecting all power stations and major substations into a single interconnected grid. During the deregulation process the government offered local power lines companies the opportunity to purchase the spur lines and run them as local utility lines. Some areas took up this offer, but some did not. For the ones that did not take up the offer, their charges were fixed untill the year 2001 at which time market prices would apply. Well 2001 is now here, and Transpower's charges are increasing to the level that they should have been at 5 years ago.

-- Malcolm Taylor (taylorm@es.co.nz), December 31, 2000.