EA consults on transmission pricing changes

For immediate release

Media release:

Electricity Authority consults on transmission pricing changes to fix flawed system

13 December 2016

The Electricity Authority released today a consultation paper setting out refinements to its Transmission Pricing Methodology (TPM) second issues paper. “We have listened to feedback on the proposed guidelines for transmission pricing, and are now consulting on refinements to the guidelines,” Chief Executive Carl Hansen says.

Since May this year the Authority has been considering stakeholder feedback on its proposed guidelines for transmission pricing. The current TPM is flawed and unsustainable.

A key feature of the refinements is to provide more flexibility in the guidelines for Transpower to design the charges. This should achieve more appropriate outcomes for consumers on electricity networks in Northland, the West Coast and Ashburton.

The Authority is also proposing to cap increases in transmission charges to distributors and major industrial customers to provide more price certainty for consumers. This cap means that distributors and retailers can mostly limit the flow-on impact to households to no more than 3.5% of their total electricity bill.

Mr Hansen says “The proposed changes are expected to reduce transmission charges for 12 of the 29 electricity network areas across New Zealand.

However, the changes won’t take effect until April 2020, when the Commerce Commission’s price control regime could also alter transmission and distribution charges. The combined effect could reduce electricity lines prices for almost all consumers.”

We are planning on announcing final decisions on the transmission pricing guidelines in April 2017 but we cannot prejudge the complexity of the issues that may be raised in submissions and we will take the time we require to consider that decision. At this stage the Authority expects a revised TPM to be in place by 1 April 2020.

The consultation on the refinements is open until 24 February 2017.

More information is available http://www.ea.govt.nz/development/work-programme/pricing-cost-allocation/transmission-pricing-review/

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