Refusal for Transpower

The Commerce Commission will refuse a request from electricity grid operator Transpower to pass on costs of back-up generation.

The cost of standby generation available within minutes increased as a result of a combination of Transpower's decision to remove Pole 1 of the high-voltage direct current link from service in September 2007 and high spot prices.

Last August Transpower sought an amendment to a settlement it has with the commission to remove its future exposure to its instantaneous reserve fees for back-up generation, by treating them as pass-through costs.

The fees, which had historically been around $3 million, are forecast to be $18.9 million in 2008-09.