News

Northland Inc urges Electricity Authority to take heed of submissions and revisit its price change review

Posted on August 28, 2015

“Under this Transmission Pricing Methodology (TPM) review Northland stands to become the worst affected region for consumers who will face close to a 10% increase in electricity prices, the largest in the country,” says Northland Inc CEO David Wilson.

A recent companion paper to the TPM review issued on the 30th of July outlines the actual impact to Northland and the transmission costs for the region’s two electricity providers – Northpower and Top Energy.

It outlines that Northpower mass market consumers are now facing an increase of 8% in their power bills while Top Energy customer’s would be facing an increase of 9.6%. Northpower’s Transmission costs would rise from $16.54M per year to $36M per year and Top Energy’s rise from $4.76M to approx. $13M.

“This will clearly be detrimental to investment in Northland and will undermine future economic growth in the region. This runs counter to Government’s regional development efforts,” Mr. Wilson says.

“As part of the Government’s vision for improving regional economies we completed the Tai Tokerau Northland Regional Growth Study (RGS) back in February with subsequent work on the Northland Regional Economic Action Plan now nearing completion,” he says.

The RGS identified several major industry sectors: tourism, forestry, farming (dairy, sheep and beef), education, marine, aquaculture and horticulture as key sectors for driving future growth. All of these sectors rely on competitive energy inputs and many are heavy users. The EA seems oblivious to these strategic considerations, Mr. Wilson pointed out.

“The last thing we need at this delicate stage is the possibility of a setback as significant as a TPM review resulting in large electricity price hikes for consumers and businesses in Northland to subsidise infrastructure upgrades that largely benefit Auckland,” Mr. Wilson says.

“This is why we are asking for the EA to take account of the views of the submitting companies and advocacy groups, and review the current TPM proposals in favour of a fairer and better way of allocating future electricity transmission costs.”

Along with Top Energy and Northpower other submissions were made by PricewaterhouseCoopers (PwC) on behalf of 21 electricity lines companies or distributors, Electricity Networks Association, the Tai Tokerau Northland Economic Action Plan Advisory Group (aka “The Advisory Group”) and the Top Energy Consumer Trust (TECT) which owns all the shares in Top Energy on behalf of all of the company’s household and business consumers.

In its submission Northpower said: “Notwithstanding the impact to other regions, Northpower is confident that the rebalancing of transmission costs could have a material adverse impact on the Northland community and economic wellbeing”.

Top Energy has told the EA that the 10% overall increase in electricity bills would be a “devastating blow” to the economy of the Far North and become a barrier to economic development and investment badly needed in the region.

Pricewaterhouse Coopers in its submission suggested: “We recommend the Authority establish a small expert working group to help it identify the problem and develop solutions. This would help to identify any objections to certain proposals at an early stage and develop buy-in to any solutions that are eventually developed”.

The Northland Economic Action Plan Advisory Group submitted that: “The current proposal does not represent regulatory good practice and will penalise Northland consumers in order to benefit consumers in centres such as Auckland. Not only is this poor allocation of transmission charges, it will have a detrimental impact on economic growth in Northland”.

The EA released its transmission pricing methodology options working paper for consultation in June and submissions closed mid-August.

ENDS