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Trustpower to appeal new Transmission Pricing Methodology (TPM) Guidelines

Trustpower is appealing the Electricity Authority’s (EA) recent decision to replace the Transmission Pricing Guidelines in the High Court. The new guidelines will change the way Transpower’s costs are allocated to its customers.

Under the current guidelines, the costs of all transmission assets are shared nationally. The new TPM Guidelines will introduce a form of ‘user pays’ for cost allocation. Costs will be allocated to the deemed beneficiaries of selected existing, and all new, assets. For new assets this will involve long-term forecasts at the time the assets are commissioned. Costs will also no longer be allocated based on transmission customers’ contribution to peak demand.

As a result the new TPM Guidelines create significant wealth transfers between Transpower’s customers. Some will pay considerably more for transmission, others less. Allocations will also change every time a new transmission asset is built. These changes will have significant flow on effects for businesses and domestic users, and impact the whole economy.

Trustpower’s view is that a fundamental change to transmission charges, which will have economy-wide repercussions, needs to be well justified. Trustpower Board Chairperson Paul Ridley-Smith says this has not been the case.

“The EA has the power to amend the Code which governs the way electricity is bought and sold in New Zealand. However, our view is that fundamental changes need to be rigorously assessed to ensure that the changes are well justified and will produce real benefits for customers. The expert advice we have received suggests the analysis undertaken by the EA, particularly in relation to the costs and benefits of its proposal, does not establish these clear benefits. A transfer of costs is not an efficiency gain. Therefore, High Court review is appropriate.”

This is Trustpower’s second review action on this matter. In 2016 the company sought a judicial review of the EA’s consultation processes, requesting more time to provide submissions on some of the core issues raised. The Court said it would not intervene in the TPM Guidelines consultation process while that process was ongoing. That process concluded on 10 June when the EA published its final decision on the TPM Guidelines.