The Electricity Authority is softening its proposed reforms for national grid payments and suggesting that even where its proposals raise power prices, other reforms under consideration by the Commerce Commission will mostly cancel them out.
However, even then, the contentious transmission pricing methodology (TPM) proposals would still raise power prices for several major industrial plants in the North Island after 2020, including New Zealand Steel, which continues to review the viability of its New Zealand operations, including the Glenbrook steel mill south of Auckland.
Where earlier versions of the proposed reforms threatened to deliver annual power price increases of several hundred dollars per household in some parts of the country, including the West Coast and the Far North, as well as large increases in Auckland, the latest proposals limit increases to no more than 3.5 percent of a customer's total energy bill in the first six years of the proposed new regime's operation, from 2020.
By then, the EA suggests the Commerce Commission is likely to have reduced the returns that monopoly owners of electricity networks can earn on their assets, largely offsetting the impacts of the TPM reforms, which are intended to ensure that regions that benefit from costly upgrades to the national grid also meet a fairer share of that cost. The upper North Island is the main beneficiary of around $2 billion of grid upgrades in the last few years.
The updated proposals were published today for a further round of consultation, following criticism from national grid operator Transpower that the proposals released in May were overly complex, and furious lobbying against increased charges led by the Auckland arm of Business New Zealand, the Employers and Manufacturers Association.