13 April 2005 Media Statement

Independent assessment of proposed grid upgrade

Energy Minister Trevor Mallard has today formally written to the Electricity Commission to set out and confirm the government's expectations that the commission will undertake an independent and wide consultative process when considering Transpower's proposed new grid upgrade from Whakamaru to Otahuhu.

"The government expects the commission to thoroughly assess Transpower's proposal in comparison with other alternatives that may meet our on-going requirement for security of electricity supply to Auckland," Trevor Mallard said.

"This assessment should look at non-transmission options, such as additional generation and improved energy efficiency, as well as alternative transmission options, including smaller, lower voltage lines.

"The government also expects the commission to ensure that all affected parties, including local communities, have a full and fair opportunity to put their point-of-view and participate in the decision-making process.

"In making its assessments, the commission will need to assess the benefits and costs
of the grid proposal and possible alternatives. This assessment will include environmental effects.

"I strongly believe that approval processes should not be rushed and that it is important that the wider community has confidence in the neutrality and thoroughness of decision-making processes. In the end this is likely to result in a faster and smoother process and timetable, as well as better quality decisions.

"The commission, in consultation with Transpower, has been asked to report back to me as soon as possible with a detailed timetable. It is expected the commission will be able to make its decision by mid-2006, if not sooner.

"The government in the meantime expects Transpower, as a matter of prudence, to continue with its planning processes, including route selection, negotiations with landowners and the Resource Management Act processes.

"The government is committed to ensuring on-going security of electricity supply. In many parts of New Zealand this may include upgrades to the grid, which is coming under increasing pressure. At the same time, the government will ensure that all decisions are subject to independent and thorough investigation and decision-making processes, including thorough consultation with the public," Trevor Mallard said.

The government set up the Electricity Commission as an independent industry regulator in 2003. It has the task of ensuring electricity is produced and supplied in an efficient, fair, reliable and environmentally sustainable manner.

The letter which was sent to the Electricity Commission is attached, as well as Questions and Answers.

QUESTIONS AND ANSWERS ON WAIKATO GRID UPGRADE DECISION PROCESS

Has the government decided that a new transmission line is needed, or not needed?
The government has not made any decisions of this nature. It is the Electricity Commission’s job to decide if and when a new transmission line is warranted, taking into account the costs and benefits of all the options and alternatives.

Transpower also still needs to go through Resource Management Act processes.

How will this announcement affect the 400kV grid upgrade project?

The announcement simply sets out the decision-making process, and reiterates to interested parties, especially in the Waikato and South Auckland communities, that there will be a fair, independent and thorough assessment of the proposed project and the options.

How long will it take the commission to make decisions?

The commission, in consultation with Transpower, has been asked to report back to the minister as soon as possible with a detailed timetable. It is expected the commission will be able to make its decision by mid-2006, if not sooner.

The Government Policy Statement on Electricity Governance 2004 asked the Commission to make decisions on the first grid upgrade plan by September 2005. Why is the Government delaying this date?

This date explicitly assumed that a public conference would not be required. Clearly, at least one public conference will be required, which adds some three to four months to the timetable in any event. In addition, the minister has asked the commission to ensure it pro-actively engages with affected parties. This will all take more time than originally envisaged.

How will the security of supply of electricity to Auckland be affected if a new transmission line is not built by 2010?
This will be a key question for the commission to consider.
Does the Commission’s timeline for decisions (mid 2006) allow time for a new transmission line to be built by 2010 if the Commission concludes it is necessary?
It is expected that Transpower, pending the commission’s decisions, will continue with its planning, route selection and negotiations with landowners for easements and access to land. It is also expected to continue with RMA processes, so that if it gets the green light from the Commission, there are few if any time delays.

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