North Is 400 kV transmission line suspended

1 June 2006

Transpower suspends North Island 400 kV transmission line proposal

Transpower has advised the Electricity Commission that it wishes to suspend its North Island 400 kV transmission line proposal, to allow a revision of the proposal to be considered.

Transpower has discussed a staged implementation of the original proposal with the Electricity Commission and intends to submit a detailed plan as required under the Electricity Governance Rules, as soon as practicable.

Transpower Chief Executive Dr Ralph Craven says the staged implementation plan would involve building a line from Whakamaru to Otahuhu that would be capable of operating at 400 kV but would initially operate at 220 kV.

“Operating the line initially at 220 kV defers the need to install high cost substation equipment at the Otahuhu and Whakamaru substations to a later date. The Grid Investment Test developed by the Electricity Commission places a high value on the deferral of expenditure. The details of the Test and how it is being applied have only recently been finalised by the Commission, and were not available to Transpower when the proposal was first submitted.”

Dr Craven says time is of the essence and a robust but timely process is needed from here.

“Transpower will work with the Electricity Commission to ensure an economic solution is arrived at that provides an acceptable level of reliability and security of electricity supply for Auckland and Northland.”

What has happened?

- Transpower has suspended the original North Island 400 kV project application which was submitted to the Electricity Commission, to allow a revision to be considered.

- Transpower has discussed the framework of the staged implementation with the Electricity Commission and is continuing to work on the details.

- Transpower is hopeful that with the cooperation of the Electricity Commission it will be able to submit the full revised proposal by July.

What will the revised proposal entail?

- The staged implementation plan involves building a line by no later than 2012 that would be capable of operating at 400 kV but would initially operate at 220 kV. The line would be converted to 400 kV operation around 2020.

- The same 186 km overhead route and centre-line would be used and the same nine km underground cable route. There may be small changes to tower and conductor configuration, but details are still being worked through.

- The envisaged staged implementation proposal is described in more detail in the attachment.

Why is Transpower revising its proposal?

- Transpower is responding to questions raised by the Electricity Commission in relation to the initial 400 kV proposal. The Rules allow Transpower to amend a proposal.

- The Electricity Commission has developed and applied a Grid Investment Test to judge the economic merits of the proposal and is applying the Test in such a way that values highly the deferral of expenditure.

- Operating the line initially at 220 kV defers the need to install high cost substation equipment at the Otahuhu and Whakamaru substations to a later date.

- With the delays that have occurred to the original project timetable, having a new line in place by May 2010 is no longer realistically achievable.

Why didn’t Transpower submit this plan in the first place?

- In Transpower’s earlier analysis, a 400 kV line in 2010 was clearly the best transmission solution. There have been a number of developments since then.

- When the plan was submitted, the Electricity Commission’s Grid Investment Test and the way it would be applied, was still being developed. It was not clear at that time how much emphasis would be placed on delaying investment.

- Some equipment costs have increased significantly in the past year or so. For example, the cost of substation equipment has increased by 40%.

- Some interim projects proposed by Transpower have been approved by the Electricity Commission, which will extend the capability of the existing grid. The most significant is a new substation east of Huntly. Transpower believes the commissioning of a new line can now prudently be put back from 2010 until 2011 or 2012.

What about submissions on the original proposal?

The Electricity Commission is still accepting submissions on its draft decision on the original proposal and Transpower will itself be making a full submission.

Transpower believes that submissions on the Grid Investment Test and the way it is applied, and on the alternatives developed by the Electricity Commission, will greatly inform the Electricity Commission’s assessment of the revised proposal.

ENDS

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