The Electricity Authority will find itself in court today facing a legal challenge over its radical shakeup of the way transmission charges are levied on supply companies.
It’s a challenge which will pit Auckland business against much of the rest of New Zealand after the Electricity Authority released a new blueprint for how electricity companies would pay for the transmission network which delivers the power.
The proposal essentially charges more to suppliers, according to their distance from the electricity generators.
Current practice is to average the transmission costs across all consumers regardless of how far they might be from the generation points.
One consequence of this is that the aluminium smelter at Tiwai Point would pay less for its power since it is only 180 km from Lake Manapouri where most of its power comes from.
The share of the smelter’s power charges required to pay for tramission would drop under the proposal from around $60 million to $40 million.
But other industries based in the North Island like a number of timber and paper mills and the Whangarei oil refinery would see their charges rise.
NZ Steel’s transmission charges would go from $4.6 million to $16.7 million.
So not surprisingly a group of North Island businesses organisations industries, local government and electricity sector participants have come out in support of the legal challenge to the Electricity Authority.
They have been joined by the Ashburton District Council which faces massive charge increases because of a historic anomaly over the way its charges have been levied.
The group comprises the, Auckland Chamber of Commerce, Counties Power, Counties Power Consumer Trust, EA Networks, EMA, Entrust, Auckland Federated Farmers, Northpower, Norske Skog, Top Energy and Vector.
Utility retailer and electricity generator Trustpower has asked for the judicial review of the consultation process used by the Authority in a review of how the national grid is paid for.
The group opposing the review has been coordinated by the Auckland Employers and Manufacturers Association (EMA)anufcatuiers’Assocation.
Its chief executive, Kim Campbell is the spokesman for the group.
“The Electricity Authority’s proposals to change the way households and businesses pay for their electricity are being rushed through by stealth before Christmas,” says Campbell.
“The plan as it stands will have a devastating impact on some of our most vulnerable communities.”
What Mr Campbell is not saying is that apart from Auckland, Northland, Ashburton and Buller most other regions in New Zealand will see their power charges drop under the Electricity Authority’s proposals.
Consequently, Mr Campbell says the proposals are divisive.
“They pit region against region, business against business and community against community.
“The Authority cleverly suggests there are always winners and losers in these processes – but the only real winners are the Tiwai Pt smelter and Meridian Energy.”
Meridian supplies power to the smelter.
The Authority estimates that Meridian’s transmission bill will drop from $96.7 million to $39.3 million under its proposals.
In contrast, the Auckland lines company Vector will see its bill rise from $178.8 million to $256.7 million and the far north company; Top Energy will see its bill more than double to $9.5 million.
“Meridian has joined the court proceedings with the sole purpose of supporting the process<” says Campbell.
“This is not surprising given how much they stand to gain.”
He says those gains will be money “out of the pockets of homes and businesses in large parts of New Zealand straight to the shareholders of these companies.”
Campbell says that in 2012, the Authority disbanded an industry working group looking at the issue, so those who could’ve given expert advice were shut out.
“ It has not commissioned any independent expert reviews of the merits of its proposals, and not engaged fully with the expert evidence provided by submitters.
“No cross-submissions have been allowed, and there is no regulatory right of appeal.
“This is bad regulatory process, in marked contrast to how the Commerce Commission operates.”
“And providing just ten weeks to evaluate a plan to overhaul nearly a billion dollars of electricity sector charges, over the same period as affected parties were working through other significant regulatory reviews, is further proof of a rushed and flawed approach.”