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NEW ZEALAND GAZETTE, No. 139

29 OCTOBER 2004

investment in generation, which would waste scarce capital resources and cause unnecessary environmental effects.

Objectives for the provision of transmission services

80 The Government’s objectives for the provision of transmission services are that:

• the services are provided in a manner consistent with the Government’s policy objectives for electricity
• the services should be provided at the standards of power quality and grid reliability required by grid users and consumers as determined by the Electricity Commission
• the efficiency of transmission services should be continuously improved so as to produce the services grid users and consumers want at least cost, and
• the services are priced in a manner that:
  • is transparent
  • fully reflects their costs including risk
  • facilitates nationally efficient supply, delivery and use of electricity
  • promotes efficient investment in transmission or transmission alternatives
  • promotes nationally efficient use of transmission services by grid users and consumers.

Connection to and use of the national grid

81 The national grid is essential to all connected parties, and should be maintained and operated to a common set of grid reliability standards. These common standards should be embodied in grid rules that recognise the interconnected nature of the network.

82 Grid reliability standards should apply to agreements between Transpower and its customers dealing with connection to and use of the grid, investment planning (including replacement), transmission system design and construction, and transmission system maintenance.

83 The common standards for the grid should be determined by the Electricity Commission, following consultation with Transpower and affected parties. The Electricity Commission should ensure that the interests of end-customers are properly taken into account.

84 Transpower’s customers should have some flexibility over standards (which could be higher or lower than the norm), so long as the integrity of the core grid is not compromised. The Commission should ensure that arrangements are in place to protect the interests of third parties when Transpower and one of its customers agree to a local variation from common standards.

85 All transmission customers should be required to have a transmission agreement with Transpower, and the Commission should develop a benchmark agreement as a default if the parties are unable to agree.

Investment in and maintenance of the transmission network

86 As part of its modeling and forecasting work, the Electricity Commission should provide for the development of statements of opportunities relating to transmission. These should:

i incorporate electricity demand and supply forecasts
ii enable identification of potential opportunities for:
    - efficient management of Transpower’s transmission network including investment in system expansions, replacements and upgrades
    - transmission alternatives (notably investment in local generation, demand-side management, and distribution network augmentation)
iii facilitate long term planning for timely securing of easements and resource consents
iv be prepared at least biennially.

87 Transpower should submit grid upgrade plans to the Electricity Commission for approval. The grid upgrade plans should be consistent with statement of opportunity forecasts and demonstrate the rationale for all expenditure (operation, maintenance and capital), taking into account the prescribed reliability standards. The plans should demonstrate that the proposed expenditure is required to meet reliability standards and/or deliver the greatest net benefit after taking into