Power reform proposal could cost Northlanders $15.5m

Northlanders will pay more than $15 million extra annually for power if a proposal to change the way transmission charges passes.

Northlanders and their employers will pay more than $15 million extra annually for power if a proposal by the Electricity Authority to change the way transmission charges passes, a regional development leader says.

The $15.5 million represents an increase of 76 per cent which, according to Northland's regional development agency, Northland Inc, would force the closure of large businesses and exacerbate the already high unemployment rate in the region.

The authority sought public feedback to the way transmission costs are charged by Transpower, which wants to recover the full cost of its services, including $3 billion of upgrades in the North Island.

We'll find it very difficult to attract investment if power costs are too high or are uncompetitive.

David Wilson

Multiple options have been proposed, including increasing line charges for Top Energy customers in the Far North from $155 to $421 - an increase of 172 per cent - and from $300 to $560 or an 87 per cent hike for customers on Northpower network in Whangarei and Kaipara.

Of the 89 submissions the authority received, 13 were from Northland and none supported the proposal which they said patently favoured large consumers and metropolitan cities, such as Auckland, at the expense of poor and remote areas.

Northland Inc chief executive David Wilson.

Northland Inc chief executive David Wilson said the authority's proposal meant Whangarei and Kaipara households and businesses which currently paid $16.2 million in transmission charges would end up paying $26.5 million- an increase of 64 per cent.

Far North power users would be hard hit with a 121 per cent increase, from $4.3 million to $9.5 million. Large industrial companies would have to fork out between $200,000 and $1 million per annum, he said.

He said since interconnection charges were approved to fund grid upgrades 10 years ago, another hike imposed on less affluent areas like Northland for the same purpose would effectively be "double dipping".

"These transmission charges, while they may look good as far as economics of modelling are concerned, they do not take into account their impact on poor regions," Mr Wilson said.

"The central government and local government's real focus has been on regional development but we'll find it very difficult to attract investment if power costs are too high or are uncompetitive."