1 February 2006

Controls on Transpower could pave way for alternatives

Proposed Commerce Commission price controls on lines company Transpower have been welcomed by Green Party Co-Leader Jeanette Fitzsimons, not just because it will save consumers up to $700 million, but because monopoly pricing seriously distorts choices about the future of the electricity system.

"Transpower says its price increases - 19% this year and 13% per annum for the next five years - are to pay for its proposed lavish grid upgrade. But not only has this project not been started yet, it hasn't even been approved. Imposing double-figure percentage increases for a speculative project cannot be justified, especially when there are better alternatives available," Ms Fitzsimons says.

"Before the grid upgrade can take place, the Electricity Commission must agree that it is the best way to meet future demand. The upgrade must also gain Resource Management consent, which will be difficult given that it will impose giant, intrusive pylons on people's land and create electro-magnetic fields near their homes."

Instead of Transpower's proposed line upgrade, the Greens have long advocated an alternative package. Measures in this package would see gas being used directly in Auckland rather than being converted to electricity further south, more use of waste wood in industry and homes in the north, better load management to avoid system peaks, and a comprehensive energy efficiency programme across Auckland.

"This package would almost certainly be cheaper than Transpower's upgrade, more sustainable because it needs less fossil fuel, and more environmentally acceptable because it avoids new pylons and produces less greenhouse gas," Ms Fitzsimons says.

"However, its eventual implementation is being undermined by Transpower's ability to raise capital in advance by price gouging. The Commerce Commission must prevent this tilting of the playing field, and its decision to impose price controls is to be applauded."

ENDS

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