Saturday, April 29, 2006

Editorial: Well-merited jolt for Transpower

Transpower has much to think about after the draft ruling denying its plan to upgrade the power supply into Auckland. Before the Electricity Commission delivers a final verdict in July, the national grid owner and operator must either modify its proposal to erect a new 400kV transmission line from Whakamaru to Otahuhu or present a more compelling case for its acceptance. Either way, it should also assess its approach.

The perils of arrogance have rarely been so clearly shown as in Transpower's attitude to those who questioned its proposal. In some ways, this may even have contributed to its downfall. Transpower's view was always that there was no alternative to stringing 430 huge power pylons across the Waikato and South Auckland landscape. Never mind that many landowners were appalled by the risk to land use, land values and their health. Never mind that some reckoned the need for a more powerful national grid could be negated by building small power stations closer to the area of demand. Transpower, like a government department of old, was not for turning.

In such circumstances, the presence of an independent arbiter like the Electricity Commission is welcome. Its brief is to cut through the bluster and deliver a cogent assessment. In this instance, it found that Transpower was not convincing. The commission concluded that an investment of $140 million in the existing network, and perhaps the building of power stations near Auckland, would delay the need for a 400kV line until 2017. That is seven years after the deadline deemed essential by Transpower to avoid the risk of power cuts.

The commission chairman, Roy Hemmingway, also noted, however, that the Waikato farmers who opposed pylons going over their land needed to accept the inevitability of a new transmission line. That, unfortunately, has the effect of rendering the commission's case less than fully convincing. The seven-year delay may, as Mr Hemmingway suggests, save the country as much as $250 million. But why wait if that saving may come at a serious cost in terms of the robustness and reliability of Auckland's power supply? Certainly, there is nothing to say that the power stations near Auckland referred to by the commission will ever be built.

It is reasonable to ask whether there can be any justification for delaying what both the commission and Transpower agree is an inevitable response to Auckland's power demands. In that context, New Zealand's history of infrastructure development is extremely chequered. For every Think Big project that would never have got off the ground if the Government had exercised greater discretion, there is a gridlocked Auckland road that bears testimony to the perils of procrastination.

The commission could not say it, but there is, in fact, at least one reason for caution. That is the fate of Comalco's Tiwai Pt aluminium smelter, which gobbles up 14 per cent of the country's electricity. Its power supply contract, which runs out in 2012, is now being negotiated with Meridian Energy. If Comalco chose to close the aging smelter, it would open up a whole new scenario for electricity transmission, through a direct-current spine, to the north.

In the final analysis, Transpower is expected to ensure that Auckland has a guaranteed power supply. It will bear the odium if the lights go out. But it must acknowledge that the importance of that task no longer guarantees it unfettered sway. It will not always be able to make the investments it sees fit. The Electricity Commission's draft ruling should have convinced Transpower that a touch of humility would not go astray. And be the catalyst for a meeting of minds.


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