Transmission pricing spells the end of a decade of uncertainty

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Transmission pricing spells the end of a decade of uncertainty

11 Jun 2020 | Business Desk

The Electricity Authority’s new guidelines for transmission pricing spell the end of a decade of uncertainty, BusinessNZ Energy Council (BEC) Executive Director Tina Schirr says.

"This has been a drawn-out process lasting more than 10-years and it’s time to look forwards, not backwards.

"The new system will end the socialising of transmission costs and use a benefit-based approach for new generation across New Zealand."

The Authority has removed the regional coincident peak demand (RCPD) charge and the high voltage direct current (HVDC) charges and replaced them with two new main charges:

-benefit-based charges - investments paid for by customers who benefit;

-a residual charge to recover overheads and remaining costs - in a way that does not distort customer decisions on-grid use and investment.

"Getting a more efficient transmission is important and investment in new generation will be crucial to support the projected increased electrification of transport and industrial processes.

"BEC strongly supports efficient pricing signals and favors a more competitive electricity market that delivers improved outcomes for all Kiwis and sector organisations", Ms Schirr says.

Transpower will now develop a proposed new Transmission Pricing Methodology in line with the new guidelines and relevant sections of the Electricity Industry Participation Code 2010.

The Electricity Authority expects a revised Transmission Pricing Methodology will be in place by April 2023.