Power play about walking the talk

JAMES WEIR
Last updated 05:00 04/01/2014
Patrick Strange
ROSS GIBLIN/ Fairfax NZ

POWER CHIEF: Patrick Strange sees Transpower as the biggest service company in NZ.

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Transpower boss Patrick Strange is a man of many surprises.

Despite running one of the biggest companies in the state's books, he lives on a yacht, for one. And he plans to sail it to the Auckland Islands south of New Zealand once he steps down as the national grid's chief executive in February, after more than six years.

The grid company was once, arguably, the most hated company in New Zealand.

Farmers in the small Waikato town of Tirau even burned an effigy of former Transpower chief Ralph Craven about seven years ago.

But Strange is actually a farmer himself, with land near Gisborne where he plans some fencing work later this summer.

And instead of backing away to a safe distance from farmers grumpy about big power pylons running through their Waikato land, Strange told staff and contractors to put on Transpower branded shirts and go out and talk to the landowners.

And surprising too, that when you ask him about the $3 billion in mega-grid projects that he has seen through to completion, Strange prefers to talk about becoming a service company and things like Twitter.

Twitter?

Yes, the online social network lets Transpower send out "tweets" letting people know about power cuts. (It also has hundreds of people that follow it on Facebook.)

"Facebook and Twitter are huge to us," Strange said, and are used every day.

Often people on Twitter first report power outages to each other before the mainstream media react.

"So we better be talking via Twitter," Strange said.

Transpower used to be an infrastructure and asset company with transformers and the like.

"That's exactly wrong for a company like us - we are a service company," he said, and has to worry about its customers and "say sorry if we got it wrong. That's a big change".

The way Strange sees it, Transpower is actually the biggest service company in New Zealand because everyone uses power and so relies on the national grid to get power from the deep South Island to Auckland and everywhere in between.

And it is an article of faith that the company needs to keep its customers informed about power cuts. Not the technical jargon of what happened - just why the lights went off when they will come back on.

"Transpower as a service company and its capability and relations with stakeholders and landowners were much more important to me (than big projects) and the big challenge," he said.

When he first arrived in 2007, Transpower was pretty introspective, though it had great talent. It was not seen as an engineering leader and innovator in the industry.

The biggest challenge in the past six years was getting Transpower's "mana" and pride back, he said. "That was more important than the projects."

And there was a "fractious relationship" with landowners, Strange said.

That's an understatement - not many companies can claim their chief executive has been burnt in effigy.

"It was a company that had almost gone into its shell, with a bunker mentality," he said.

In hindsight, Transpower dropped the ball for many years when it under-invested in the grid. Some of the big projects should have been done many years earlier than they were.

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The theory was, more than a decade ago, that smaller scale "distributor generation" - such as fuel cells, would be built near to where the demand was, so there would be less need for the big grid system.

The so-called "glide path" would make the grid redundant in time. That meant the grid was not maintained as well as it should have been.

"Engineering became secondary and it became difficult to get projects authorised, hence the bunker mentality," he said. "That was still evident in 2007".

That was not criticism of the people in charge at the time, Strange said.

"These things just happen.

"The underlying premise that the grid would become redundant was always terribly flawed," he said, because electricity from hydro power needed to come from the south to the demand in the north.

New Zealand is blessed with enormous hydro dams in the lower South Island.

"They cost a lot to build but nothing to run," he said. "Water is free, so to speak.

"All the distributor generation in the world would never approach the competitiveness of using that water."

That meant New Zealand would always have that huge block of South Island power generation needing to be shipped to Auckland.

"It doesn't matter if demand increases or decreases," he said.

MEGA-PROJECTS

Strange admits the Waikato line involving more than 300 landowners was the toughest project of them all, the so-called Nigu project, North Island Grid Upgrade.

Few of the landowners had signed easements for their farms when the project started.

"They were basically vowing never to let us on the land," he said.

"That was always going to be a struggle."

But there was a change of tack. Up till Strange came in, Transpower staff and contractors did not wear company logos, for fear of personal safety. Within two or three months, they were all in Transpower shirts and all the cars were branded too.

"We are a service company, so we will go out and talk to people, and work with them," he said.

Strange expected bulldozers to go in front of farm gates, but that did not happen in the end. And there was no compulsory acquisition of land either.

"That's a huge credit to the landowners. We spent a lot of time talking to them and being open with them," Strange said.

Farmers were worried about the big pylons going across the family farm and didn't have someone to talk to.

"We were not a face, and we weren't honest and not out there walking the farms."

Strange did his bit going out to see farmers or lifestyle block owners. Some had an emotional attachment to their land or were worried about the impact on land values and they wanted fair compensation - "Which they got".In the end, Transpower bought $200 million of land to build the grid and $160m on compensation.

"The money helped, but we had to connect with the community, and stop being a Wellington bureaucrat," he said.

POLE 3

When Strange first arrived at Transpower, part of the link with the South Island, Pole 1 which was built in 1962, was shut for safety reasons, though later returned to restricted service.

But in 2008 that part of the cable was seen as in such bad shape it could not be insured against catastrophic failure, including the potential for big explosions, according to reports at the time.

In his first year the Pole 3 project was approved to replace Pole 1, along with the Auckland mega-project. "They were no brainers in my mind. We were late starting, but not the end of the world."

Late in 2013, Pole 3 was finished, a year behind initial plan, but it came in within budget.

The link was running at 970 megawatts north just before Christmas, which Strange called "huge", to take advantage of the high hydro lake levels in the South Island. About a third of the North Island load was being supplied by the South Island hydro lakes.

That meant there was little thermal gas or coal-fired power generation being run while all the cheap hydro power from Manapouri and the Waitaki Valley was running north to Auckland. That was good for the economy and the environment.

"That's what New Zealand is all about. We are the world's envy (for generation)," Strange says, with hydro power and geothermal in the North Island.

Strange said his six years at Transpower was longer than he had planned.

"CEOs have a shelf life. As good as you feel you are doing, when you feel you are hitting your straps you should leave," he says. "You need new views."

Strange will be replaced by Alison Andrew, who worked for him at Fletcher Challenge.

He will be on a couple of company boards, though he won't say which. And "the farm needs some new fences," he says.

'FEAR OF THE UNKNOWN'

The new national grid through the Waikato had people worried about their health as well as the value of their land.

Some of the more than 300 land owners affected by the North Island grid upgrade were concerned about EMF, electromagnetic fields, and what they might to do their children's health.

Transpower knew the power lines were a long way away from people, though in some cases they moved houses, where they were under lines.

"We knew it was not a (health) issue, but you can't just say that," Strange said.

Transpower sent staff out with current meters so they could show land owners the EMF.

"Turning on the under-floor heating was actually ten times worse," he said.

There was a fear of the unknown and what illnesses the power lines might cause.

But he points out that the issue has been around for 100 years and has been well researched.

"All the science . . . (shows) absolutely no evidence of any health impacts, bar one small correlation to a childhood leukemia, but that was a tiny blip," he said.

Asked if he would be comfortable living under power lines Strange said: "I'd choose not to live next to a motorway or in a city or under a power line, or walk down the street with diesel fumes."

But that was not the same as saying people were unsafe.

INFUSION OF YOUNG BLOOD THE KEY

Strange says a key change to the company was to bring in young blood, doubling the company's graduate programme when he first arrived six years ago.

"That's probably been the best thing we have done in the whole company," Strange said.

That was initially mainly electrical engineers, but was widened over time, to mechanical and civil. Now the company has business, economics and even a psychology graduates.

"We look for the person, rather than the training," Strange said.

"We needed to get young people in," he said. "Older people are a huge asset, but I'll be honest, we are also a liability because we manage the way we did 30 years ago. The world has changed".

Some of the older engineers were in the company for "life", becoming top managers after 30 or 40 years. And those older people thought younger people should go through the same process.

"Now, information flows much better. We are a much flatter structure. We'd rather people make decisions at the action point, rather than pass them up through a long process," he said.

For example, Transpower wanted to use robots in substations. While an older staffer might recommend a study first, younger staff took a short-cut.

"The kids just duck down to Dick Smith and buy a prototype- which is exactly what we did for $150," he said.

- BusinessDay

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