Benefits and costs in upgrade

Last updated 05:00 28/03/2014

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All power customers face slightly higher charges if Transpower gets approval for a $161 million lines upgrade in the lower North Island.

The Commerce Commission yesterday granted draft approval for the upgrade on lines between Hutt Valley's Haywards substation and the Bunnythorpe substation near Palmerston North.

The commission's decision is open for feedback over the next couple of weeks.

Transpower plans to replace the existing conductors, or wires, on the two transmission lines between the Bunnythorpe and Haywards substations. The larger conductors to be used would increase capacity on each line by about 12 per cent.

Towers would also be strengthened, and 114 would be increased in height by up to 3m, a commission spokesman said.

The investment would add an average of 0.041c per unit to consumers' bills.

Transpower requires funding of up to $161m to complete the project and must seek approval from the commission to recover the costs for major capital investments it undertakes.

Commission deputy chairwoman Sue Begg said there is clear benefit for consumers from replacing the transmission lines, which are in poor condition.

"Transpower has calculated that a new line with the same capacity would provide an expected net electricity market benefit of $977m.

"The proposal to upgrade the lines would achieve benefits by reducing transmission losses and improving the ability to use the cheapest mix of generation between the thermal generators in the North Island and the Hydro generators in the South Island."

Begg said Transpower's preferred option "appears to provide a good balance between increases in capacity, capital costs and expected benefits for the electricity market".

Transpower builds, maintains and operates the country's high-voltage electricity transmission network, often referred to as the National Grid.

Once the commission has received and considered any submissions, it expects to finalise its decision by May 2.

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- BusinessDay

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