NZ Electricity Distribution: Big Transmission Charge Increases On The Way
November 11th, 2009
Transpower is projecting double digit annual increases in transmission charges as upgrades to the HVDC link across Cook Strait, the new line through the Waikato to Auckland, and the North Auckland and Northland upgrade come on line in the next 10 years. Transmission costs comprise only around 8% of the domestic electricity tariff, so the impact of higher Transpower charges on consumers’ power bills will be muted, and total transmission costs are assumed to remain at less than 10% of the total power bill, once the upgrades are complete, the company has told a briefing of financial analysts.
However, Transpower is unable to increase its charges relating to upgrades until they are completed, so this year’s transmission charge increases will be as low as 1%. New charges are being notified in the near future. Transpower’s general manager, corporate services, Howard Cattermole says the Oct 30 outage north of Auckland, caused by a forklift hitting lines which traverse the Metroport site in south Auckland, meant Transpower will again miss its system reliability targets this financial year. Transpower’s 2010 Statement of Corporate Intent says the company is targeting less than nine system minutes lost during the year, and last week’s outage alone was the equivalent of eight system minutes – a measure of the impact had the outage been across the whole national grid.
Transpower’s CEO, Patrick Strange, met with Commerce Commission officials last week on the reliability under-performance and the best way to express performance targets in future. The monopoly national grid operator expects its debt to double from around $1.2bn at present to around $2.5bn in four to five years, with the debt/equity ratio peaking at around 54% towards the middle of the next decade. It is considering various forms of debt-raising, including a potential $200m retail bond issue in NZ early next year.
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