Buller Electricity’s claim that Transpower acted unreasonably when setting new transmission charges was dismissed by the High Court. Buller says Transpower’s new price modelling discriminates against Buller consumers and will see each consumer’s annual charges increasing by at least sixty dollars a year; a burden imposed on what is one of the country’s more economically deprived communities, it says.
The legal dispute centred on Transpower’s differential pricing for power passing through ‘connection assets’ as distinct from ‘interconnection assets’ and its 2023 decision to re-classify Buller Electricity Ltd’s 37 kilometre supply line from Transpower’s Inangahua substation as a connection asset.
Costs of ‘interconnection assets’ are socialised across all power users. This is the backbone of Transpower’s national grid, a natural monopoly distributing power from generation points to local lines companies.
‘Connection assets’ are spur lines, providing a connection from the national grid to one Transpower customer only: a lines company or a large industrial user. Infrastructure costs related to this connection are charged directly to the customer.
Buller Electricity said it is being penalised for historical reasons, not of its making. Its 37 kilometre Transpower supply line is over-sized, comprising two parallel 110KV lines providing a peak maximum capacity of 100MW. At peak demand, Buller requires no more than 11MW. The 110KV lines were installed decades ago in anticipation of increased industrial demand on the West Coast, growth which never eventuated.
There are about 4800 end-consumers in the Buller region.
Buller Electricity was not the only lines company facing increased pricing with re-classification of spur lines as ‘connection assets.’ The High Court was told of line company Waipa Network gaming the rules by constructing a connecting line between the ends of two spur lines in its district, forcing Transpower to treat the new loop as a ‘interconnection asset.’
Buller hinted it might install a saddle across its two adjacent 110KV supply lines and claim they too have become an interconnection asset.
In the High Court, Buller Electricity sought judicial review of Transpower’s reclassification of the 37 kilometre supply line as a ‘connection asset.’ Judicial review is not an appeal; it is an inquiry into the process by which a decision is made.
Justice McQueen ruled Transpower took into account all matters it was legally required to consider and had not act unreasonably.
Most of the court’s time was taken up with argument over economic modelling used to determine electricity supply pricing and the process by which the new 2023 pricing rules were devised.
Lines companies were asked for their views before proposed changes were implemented.
The fact Transpower did not incorporate Buller Electricity’s views in the new transmission pricing scheme did not mean Transpower had pre-judged its final decision, Justice McQueen ruled. Buller said an overriding ‘material impact test’ should be among the criteria, taking into account the effect of price increases on end-consumers.
Buller has other options, Her Honour pointed out.
The pricing scheme does allow line companies to ask Transpower for a discount. The rules allow for application of what is described as a ‘prudent discount policy,’ but potentially this is available only when a customer has the leverage of otherwise being able to bypass the national grid.
The pricing scheme also allows for a form of appeal; an independent expert review. Buller’s expert review application was put on hold while its High Court judicial review application was underway.
Buller Electricity Ltd v. Electricity Authority & Transpower – High Court (28.03.24)
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