The Commerce Commission has approved Transpower's proposed $392.9 million investment in the national grid, and is satisfied that the identified need to strengthen the electricity transmission system over the next decade is in the long term interests of Kiwi consumers.
However, Transpower will need to provide assurance to its customers before it makes the $103 million investment in the Cook Strait undersea link to address residual concerns about benefits to consumers. The High Voltage Direct Current (HVDC) link connects the national grid between the North and South Islands.
Commissioner Vhari McWha says the Commission is satisfied Transpower's capital expenditure on its central North Island and Wairakei projects will support a secure and reliable power system that is able to meet the increasing demand by New Zealand households, businesses and industry.
"At the same time, we are very conscious of the impact of these investment costs on New Zealand consumers – big and small – as they flow through to electricity bills. So our approval is also based on being satisfied that consumers are going to get value for money – that the spend is justified, and the timing is right."
In its draft decision released in November 2023, the Commission questioned Transpower's proposal for its HVDC link, citing concerns over the timing and benefits to consumers. In making its final decision, Ms McWha says the Commission has retained its draft decision to approve the HVDC component on the basis of firm assurance from Transpower that it will manage the timing risks.
"Several submitters supported our draft decision on the Cook Strait undersea link and have sought greater clarity about the steps Transpower will undertake to ensure there is public scrutiny of its decision to invest. Our final decision sets out the steps we expect Transpower to undertake before investing, and we are confident that these will provide interested parties with an opportunity to provide input and ensure that electricity consumers benefit from Transpower's investment," Ms McWha says.
Transpower's NZGP programme was initially submitted to the Commission in December 2022 and an updated proposal was received in September 2023 following the discovery of Transpower costing errors. The Commission issued a draft decision on the proposal in November 2023. The Commission's final decision can be viewed in full on the Commission website.
Background
Transpower's proposal, known as Net-Zero Grid Pathways Phase One (NZGP1), comprises a series of investments spread across three large projects to upgrade transmission network capacity with the objective of "enhancing the existing grid backbone between now and 2035". Transpower has promoted these investments as key to delivering the transmission system New Zealand needs to electrify the economy and meet decarbonisation targets, such as net zero emissions by 2050.
The first two projects consist of upgrading the existing lines that run through the Central North Island and Wairakei regions. The third is focused on building capacity in the HVDC link, which carries electricity between the North and South Islands.
