Govt ready to order relief for power grid

By Mark Reynolds

The Government will step in if necessary to make sure money is spent on beefing up Auckland's increasingly over-burdened electricity supply grid.

That intervention could involve forcing electricity industry participants to spend up to $300 million on a ring of high-voltage transmission lines around the region. Alternatively, it could arrange for a large power station to be built north of the Harbour Bridge.

Mike Lear, deputy secretary responsible for networks and resources at the Ministry of Commerce, said yesterday that state-owned TransPower had retained the right to unilaterally recover the cost of reinforcing the national power grid.

This was despite TransPower last month winning Commerce Commission approval to abdicate outright responsibility for security of the power supply system.

"The Government view is that with deregulation of the energy market, interested parties will ensure the system is working properly," Mr Lear told a meeting of the Institution of Electrical Engineers.

"We believe the market has the right incentives to contract with TransPower to deliver the required level of service."

But that said, the Government would make sure money was spent where required to ensure there was enough capacity in the power supply system.

"TransPower has still got that right," he said.

Mr Lear was responding to concerns that recent upheaval in the power industry had made it unclear who should take responsibility for security of supply, and how it should be paid for.

In the past, TransPower would negotiate new investment agreements with integrated power companies; but those companies have been split into line, generation and retail power concerns and are not prepared to pay for better infrastructure unless they are guaranteed extra income from the spending.

The problem with the national grid surrounding Auckland has been highlighted in recent months by constraints in the Huntly area, which have pushed wholesale energy prices in the upper North Island up by 0.25c to 0.5c per kilowatt hour at peak times. That has cost the industry about $30 million over the past couple of months.