Transpower rejects bottleneck solution

Friday 2nd February 2001

"We're not part of that market and we try to stay neutral."

By Ray Lilley

Transpower is under fire from power companies for failing to make simple enhancements to the national grid that would cost as little as a few million dollars but relieve the problematic supply bottleneck north of Taupo.

The national grid operator is seen as unwilling to commit itself to the efficiency gains, which would lift the threat of electricity supply shortages in Auckland, the country's biggest business centre.

At least one electricity generator believes 50-100MW of extra peak power could be sent north if the minor measures were implemented, fully covering any outage threat.

The upgrade work would take no more than a year to 18 months, would use existing equipment and would not involve any significant capital outlay.

It would ease the power supply bottleneck for Auckland and other northern areas until new thermal generation plant can be built in the region in about five years.

Transpower could do these low-cost solutions, such as adjusting line capacity for weather conditions, almost immediately for an outlay of a few million dollars.

Only one upgrade, an inter-trip system, has been implemented on one line as a partial solution to Auckland's threatened mid-summer power shortage.

Mighty River Power chief executive Doug Heffernan said the "very low cost measures could ease the Taupo [power supply] constraint to some degree."

The enhancements could be achieved relatively quickly and would not need investment in major new assets.

He said the grid owner would be right to be concerned if the solution was to spend $100 million on new assets that new generation plant could render superfluous within five years.

"If the measures are to enhance the use of the present assets without needing to install new assets, why not do that and use existing assets?"

Another senior industry executive, who asked not to be named, said low-cost measures would definitely provide a short-term fix for the supply constraints of the national grid north of Taupo.

Transpower argues its focus is on the short-term security of the supply system, as parts of the northern region were earlier facing shortages. These have now been averted.

The industry has been discussing the upgrade of power supply capacity into Auckland for 10-12 years.

The result of the bottleneck was the development of regional power supply markets, as the Taupo constraint prevented suppliers providing extra power to the north.

"Transpower is a law unto itself and it's extremely difficult to put commercial consequences on its actions. It's very difficult to deal with a monopoly." Transpower chief executive Bob Thomson said the issue for the north was not security of supply or volume but "how to pull the juice up there."

He said the new inter-trip installation had helped add to supply levels but it "had merely moved the constraint [in the system] further up the line."

The company had expected to gain more capacity from the inter-trip, but "we got only half to three-quarters of what we expected." If the issue was one of supply security, Transpower would invest and take the risk of not being paid. "We would get it back in some way."

But the problem was a price issue "and we [Transpower] get stuck in the middle of the market. So if someone pays, we will do it [put in the line capacity upgrade]."

Mr Thomson said it was untrue that the upgrade could be done within 18 months because the Electricity Act allowed the company only very limited rights to change supply lines.

The industry structure allowed constraints like those north of Taupo to be relieved in a rational manner and Transpower was working with committees on how to do that.

He denied Transpower was impinging on the electricity market by not upgrading supply lines.

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