KEY POINTS:
This week's electricity disruptions in Auckland, following the failure of a transformer during routine substation maintenance, have highlighted an uncomfortable truth. So old and so fragile is much of the city's power infrastructure that further brownouts will occur in the short term. That creates an equally problematic scenario centred on just how this should be tackled. Sticking largely with a somewhat ramshackle nationwide structure, which functions on the basis of curing things quickly once the inevitable breakdowns occur, is one possibility. Alternatively, funding will have to be found, ideally for a state-of-the-art transmission system that keeps power flowing virtually whatever happens.
The first option might be feasible if future disruptions were to be minor, relatively isolated, and fairly infrequent. Those loath to face the multibillion-dollar cost of a gold-plated system would argue this was tolerable. Often, indeed, New Zealanders have been reluctant to accept the need for such spending when the country can get by with something that works after a fashion. That is not, however, a view likely to be shared by the retailers of St Heliers, who bore the brunt of the latest outages.
This dilemma is common enough. In London, they are wrestling with something similar. Snowstorms have caused widespread chaos, including the closure of schools and businesses. This, as with Auckland's power disruption, is nothing new. London public transport tends to grind to a halt every time snow falls. Generally, this is regarded as a minor irritant. The wringing of hands this time is a result of the depth of the snow - the product of the heaviest fall in 18 years - and the scale of the disruption. The choice is to invest heavily in snow-clearing equipment and suchlike or carry on regardless because this is a rare occurrence.
Auckland faced much the same choice after the 1994 drought. So severe was the water shortage that $155 million was spent on a pipeline from the Waikato River to ensure it did not happen again. There were few takers for the argument that such expenditure was unnecessary because, first, Auckland had coped and, secondly, history suggested another drought of this magnitude would not occur for several generations.
Power disruptions have a more thoroughgoing impact than water shortages.
This is also Auckland's second major incident in two years. Realistically, a grid that includes parts which predate World War II is no longer tenable. There is, in fact, little choice but to spend heavily to prevent disruptions becoming more frequent. The only real question is how the bill is met.
Transpower, the state-owned enterprise that runs the national electricity grid, suggested three years ago that the required investment meant its prices would have to rise at least 10 per cent a year.
This plan to charge consumers for its capital needs was, however, torpedoed by the Commerce Commission. It restricted price increases to just below the inflation rate. That means Transpower must fund the upgrade, in large part, by borrowing. The Government has chipped in by declining to take a dividend for the next few years. But it will need to do more, a point seemingly accepted by the Prime Minister, who noted that "tens of millions of dollars" would have to be poured into Transpower's programme.
Yet no matter how the upgrading work is funded - by electricity consumers or the taxpayer - it is, inevitably, the public who will pay for the years of neglect of the power infrastructure. At least this week's brownouts have confirmed the extent of the problem. If getting by was once an option, it is no longer. This is a bitter pill that must be swallowed.
