Transpower is proposing a series of investments – the Net Zero Grid Pathways proposal – to enhance the core electricity transmission grid between Bunnythorpe and Whakamaru power stations, and the high voltage direct current (HVDC) link across the Cook Strait. These investments will help ensure they can accommodate potential new renewable electricity generation, and meet future electricity demand.
The Commerce Commission (the Commission) is responsible for making a decision on Transpower’s proposal for the first stage of this work. Transpower submitted its first proposal for this work in December 2022. It then submitted an Addendum to the proposal in June 2023, and then sought further feedback from its stakeholders in August 2023 after errors were identified in its modelling. As a result, Transpower now prefers a different option to the one originally proposed. The Commission published its draft decision on Transpower's proposal on 16 November 2023, and invited feedback on this decision.
Submissions on this consultation closed on 14 December 2023.
Our submission on the draft decision and reasons paper focuses on Transpower’s proposed $103 million investment in the HVDC link between the North and South Islands.
We noted the Commission’s comments that this investment did not appear to have 'immediate benefit to consumers. As a result, there was a risk of over-investment associated with the project.
We further noted the Commission proposes approving the investment 'contingent on Transpower being able to quantitatively demonstrate to interested persons a net market benefit'.
Our primary concern is that there must be an opportunity for adequate public scrutiny of Transpower’s future assessment of the net market benefit of the HVDC project. This scrutiny is essential to gauge the project’s expected benefits (and costs) to consumers. Without independent scrutiny, there is also a heightened risk that errors will not be detected.
We therefore suggest the Commission considers including additional details in its final decision about the consultation process that Transpower would be expected to undertake, to ensure there is adequate public scrutiny. This is important, given the Commission’s draft decision proposes that making a start to the HVDC upgrade would not be dependent on any further decision or analysis by the Commission itself.