New Zealand Gazette – 2008 – No. 92

Page 2487

✨ Transmission Network Investment and Maintenance

4 JUNE 2008

NEW ZEALAND GAZETTE, No. 92

2487

The risks to maintaining grid reliability resulting from uncertainties in demand
forecasting and easements should be conservatively managed.
This should help the essential process of maintaining stakeholder confidence in
ongoing security of electricity supply even if, at times, there is some loss of
flexibility around investment choices and some additional cost for electricity
consumers.

Final environmental requirements are determined by consenting authorities under
the Resource Management Act 1991 which provides the statutory framework for
dealing with environmental effects.
To the extent that the Commission considers the environmental effects of new lines
proposed by Transpower in a grid upgrade plan, it should also take into account
any longer term benefits that larger capacity lines may provide by avoiding multiple
smaller lines.

As part of the consideration of transmission investments, the Commission should
ensure that transmission alternatives are considered to the extent practicable
subject to the following conditions:

only alternatives which have a high probability of proceeding, and where
reliability can be maintained by contingency measures if the alternative is
delayed or does not proceed, should be considered;
alternatives which are only likely to proceed if they are assisted financially by
the Government or relevant body should not be considered unless the
Government or relevant body has agreed to provide such assistance.

As part of its consideration of transmission pricing, the Commission should
consider whether there would be net benefits in providing for a mechanism
whereby investments in transmission alternatives receive payments reflecting some
or all of the value of avoided transmission investment. This is a complex subject,
and the Commission will need to take into account, amongst other things,
practicalities, effects on incentives to invest in alternatives, and the extent of
assurance that grid reliability standards will be met.\n## Pricing for connection to and use of the national grid
Transpower should determine its total revenue requirement (covering both sunk
and new investments) subject to the constraints of the Commerce Act 1986. A
transmission pricing methodology should determine how this total revenue is
recovered from parties under the agreements for connection to and use of the grid.

The Government expects transmission services to be priced as efficiently as
possible and, subject to the Commerce Act 1986, Transpower’s charges to recover
the full economic costs of its services.
The Commission should ensure that the following principles are applied by
Transpower in developing any transmission pricing methodology, and by the
Commission in approving it:

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