Transpower submission on EC draft decision

23 June 2006

Transpower submission on EC draft decision

Transpower has today given the Electricity Commission a comprehensive submission in response to the Commission’s draft decision on the North Island 400 kV transmission line proposal.

In its draft decision in April, the Electricity Commission declined Transpower’s application to build a new 400 kV line from Whakamaru to Otahuhu on economic grounds. The Commission called for public submissions on that draft
decision.

Transpower has since announced that it will be submitting a revised proposal. The Electricity Commission has stated that the submissions it receives on the suspended draft decision will be important for their consideration of the new proposal.

Chief Executive Dr Ralph Craven says Transpower’s submission includes supporting documents from six international recognised experts.

“The experts have confirmed Transpower’s concerns that the Electricity Commission’s draft assessment was too narrowly focused.”

In Transpower’s view, the proposed 400 kV transmission line:

- is a strategic investment that underpins New Zealand’s economic growth over the longer term,
- supports competition between generators and encourages the development of renewable generation,
- provides long-term confidence to business investors,
- provides new physically separated points of supply at the Otahuhu substation; and
- provides long term benefits well beyond the limited timeframe used by the Commission.

“Transpower considers that the Commission’s alternatives, which delay building a new line until at least 2017, do not reflect good industry practice and are in fact, not real alternatives for the provision of a reliable, secure electricity supply to Auckland,” Dr Craven said.

Transpower’s concerns with a delay until 2017 include:

- delaying until 2017 will restrict the economic growth of Auckland,
- relying on a series of ‘incremental’ upgrades between now and 2017 prolongs and adds risk to an already critical situation,
- a delay in any of the inter-dependent incremental upgrades could push the new line out beyond 2017,
- maintaining a stable voltage on the system would become increasingly difficult if not impossible by 2017,
- planning to operate the system at the extremes of its limits is not prudent; and
- the costs to all New Zealanders of investing too late are far higher than the cost of investing too early.

“In its submission, Transpower has reconfirmed its view that 400 kV is the correct voltage for the new line,” Dr Craven said.

The reasons for this include:
- 220 kV technology is yesterday’s solution to tomorrow’s problem,
- moving to a higher voltage than the 220 kV system built 40-50 years ago is both an economic and strategic decision,
- a 220 kV line would provide less capacity over time and require more new lines to be built sooner,
- it would be irresponsible to obtain an easement for a new line and then build a line with only moderate capacity; and
- a direct current (HVDC) solution is too inflexible, expensive to upgrade or adapt and less reliable.

“Transpower believes the Commission reached a draft no decision because of the way it has applied the Grid Investment Test,” Dr Craven said.

Specifically, the application of the Test has:
- understated the risks of delaying a new line,
- understated the benefits of a robust transmission grid,
- overstated the cost of Transpower’s proposal,
- defined grid reliability standards too narrowly; and
- been applied without adequate engagement from the industry and Transpower.

“In response to the way the Grid Investment Test has been applied, Transpower has elected to suspend its original proposal and to work on a revised proposal,” Dr Craven said.

This staged proposal will include:
- construction of a 400 kV capable transmission line by 2011/2012,
- running the 400 kV capable line initially at 220 kV; and
- operating the line at 400 kV at some later date, depending on demand growth.

In addition to the staged proposal, Transpower is also working on a separate project to reduce Auckland’s dependence on the existing substation equipment at Otahuhu.

“Transpower is working closely with the Electricity Commission to secure a timely decision on the revised proposal. We need approval in order to secure a safe and reliable supply for Auckland.

“This whole approval process has been a new experience for both Transpower and the Commission. To assist the consideration of future projects, we want to work with the Commission and the industry to reach agreement on a robust, transparent, repeatable and comprehensive Grid Investment Test framework,” Dr Craven said.

The three volumes of Transpower’s submission are available from www.transpower.co.nz

ENDS

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