Transpower has released its proposed TPM which it submitted to the Electricity Authority on 30 June 2021. While the Authority appreciates the significant work Transpower has done to date, the Authority does not consider the proposed TPM ready for review by stakeholders or for public consultation as it is still being assessed.

Once the assessment process is complete, the Authority’s Board will decide on and publish a proposed TPM for public consultation. The Authority is targeting consultation to start from October 2021.

Part of the release by Transpower includes the Authority’s request for Transpower to reconsider six aspects of the proposed TPM. These include resolving the first mover disadvantage for connecting parties, ensuring batteries and similar storage systems are on a level playing field with other generation, the allocation of overhead costs, setting the residual charge for a new entrant, and the prudent discount policy.

After considering our feedback, Transpower will decide whether to revise its proposed TPM. The Authority is also still assessing aspects of the proposed TPM that relate to benefit-based charges.

The package released by Transpower includes newly calculated indicative pricing – what each customer’s charges would be if the proposed TPM applied in 2021/22. These are different to the indicative charges released by the Authority in 2020.

Transpower’s new indicative pricing reflects how charges would be calculated under its proposed TPM and uses updated data on the price cap. Some of the matters we referred back to Transpower will affect indicative charges under the proposed TPM, for example, how overheads are recovered.

Due to material differences in the way the charges are presented, Transpower’s indicative charges are not directly comparable with the Authority’s 2020 estimated charges. For example, in the Authority’s 2020 estimates, connection charges were mainly excluded and charges were presented after applying loss and constraint excess (LCE) rebates.

The Authority is aiming for any new transmission pricing to come into effect on 1 April 2023, but there are still several steps remaining in the process which could impact on this. Any new charges will be different to the indicative charges released for a number of reasons, including needing to take account of any new transmission investments, any new customers, and of any customers that have shut down their operations (such as Norske Skog’s Tasman Mill).

We appreciate the industry needs certainty on transmission pricing and we expect these reforms will ultimately deliver that certainty. We encourage interested parties to focus on the proposed TPM that will be released by the Authority during the public consultation period.

The Authority will continue to regularly communicate with interested parties over the next period to ensure it is clear when the public consultation process begins, and how documents released fit into the TPM reform process.