Transpower
has benefited from some double dipping. Auckland
power utility Vector failed in its argument that Transpower owed it a refund of
$3.2 million for charges levied while a new main transmission line was pushed
through central Auckland. At issue was
the question of who bears transmission costs during the staged development of Transpower
infrastructure.
The High Court ruled that
Transpower could levy all users for the cost of a transmission grid upgrade
while at the same time charging an individual power utility for using part of
the upgrade while still under construction.
During 2013-2014 Transpower
strengthened its Northland network by constructing a new transmission line from
Penrose to Albany through central Auckland.
Transpower’s income is derived from
transmission charges levied against those drawing down from the grid. The main grid is an “interconnection asset”. Power can flow in either direction through
the grid Costs are “socialised”. The cost of building and maintaining the grid
interconnection is spread across all lines companies and a few major
electricity users since supply to individual recipients cannot be easily
metered. By contrast, users at the end
of a spur line are charged individually for power taken. Power flows only one way and can be metered.
The High Court was told
Transpower socialised proposed costs of the Penrose/Albany interconnection on
the assumption that this upgrade would go live as one completed project. Because of construction delays, one section
across part of Auckland’s North Shore went live nine months before completion
of the entire project. Vector was sole
user of this section of the project for these nine months. Transpower treated this stage of the link as
a spur and billed Vector $3.2 million for power carried during the period of
Vector’s sole use.
Having paid the $3.2 million
invoice, Vector demanded repayment. It
was being asked to pay twice for a transmission upgrade: first as its share of
the “socialised” interconnection construction costs; and secondly for its nine
months usage prior to commissioning of the final project.
Justice Williams ruled no
refund was required. A 2010 participation
code forming part of the Electricity Industry Act defines what is an
interconnection asset and what is a spur.
The code speaks in the present tense and recognises that a particular transmission
link can change at any given time between interconnection asset and spur. For the nine months in question, Vector’s use
of the first commissioned stage of the planned interconnection link was use of
the link as a spur.
The Electricity Authority says
individual utilities can negotiate with Transpower over transmission charges to
be levied on interim use of those parts of a staged development which are temporarily
operating as a spur.
Vector
v. Transpower – High Court (24.12.14)
15.005