Transmission

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Draft Government Policy Statement on Electricity Governance (Released 12 March): Summary of and Comment on Submissions

[ Last Updated 22 July 2008 ]

Submission	Officials' Response
Powerco - submits it would be useful to clarify that this section is applicable to the 'national grid' as defined in the Electricity Act 1992.	Definition is not required in the GPS.
MEUG – this section is a good example of how the GPS has become too detailed and intrudes on the operational detail that the Commission is already obliged to operate within and improve on. This section is essentially redundant as the higher level objectives of s. 172N of the Electricity Act are sufficient.	Noted. The Act requires a GPS.
Para 88 – Transpower – recommends this is balanced by a comment that there is a countervailing risk of under-investment in transmission.	The last sentence will be deleted.
Para 88 - Powerco – the 2^ndsentence could be improved by acknowledging that whilst transmission does have natural monopoly characteristics there is competition at the margins	Noted. No change.
Para 89 – ENA –add a further sub bullet to the 7^thbullet "promotes efficient investment in transmission-reliant generation or generation alternatives, including the economically efficient location of alternatives" to be consistent with other objectives in the GPS including promotion of renewable generation and demand side options.	No change. Covered in 3^rdand 4^thsub bullets in same paragraph.
Para 88 - Contact – 5^thbullet - strongly agrees with emphasis on 'cost effective' that has been added.	Noted
Para 88- Powerco – submits there could be value in MED ensuring the various pricing objectives [in the GPS] and the incentives they see to create are consistent.	Noted. Pricing paragraphs are consistent with government's current policies.
Para 88- Vector – priority should be given to developing a pragmatic approach to locational transmission pricing.	No change. Refer 3^rdbullet para 115.
Para 92 – Transpower – supports the revised wording.	Noted
Para 92 - ENA – after the words 'reliable grid' add the words 'and complement wider electricity industry investment' as the Commission should be conscious that optimising overall investment in electricity delivery systems is in the national interest, and should not be unreasonably compromised by a focus on transmission investment alone.	This bullet is about grid reliability standards and the connection to and use of the grid. Other issues covered in other areas of the GPS.
Para 95 – Transpower – recommends the 1^stsentence be amended to clarify the status of the SOO with the inclusion of ".. to provide information to assist the identification of potential investment opportunities." at the end of the sentence.	No change. Covered in 2^ndbullet.
Para 95 - Contact – strongly supports linkage between grid upgrade plans and the SOO.	Noted.
Para 95 – Transpower – recommends the SOO give specific consideration to security of supply with the addition of a further bullet point referencing specifics in section 6 of the GPS.	No change. Security of supply is inherent in the development of the scenarios and matching of forecast demand and supply.
Para 96 – Genesis – delete as now superfluous .	Disagree. Included for clarity.
Para 97 – Transpower – strongly supports the concept as an appropriate development of the regulatory arrangements.	Noted
Para 99 – Transpower – believes the wording may be interpreted to mean the Grid reliability standards take precedence or even over-ride the other objectives for the provision of transmission services set out in para 89. Recommends the 1^stsentence should be extended to refer also to the objectives set out in para 89. The 2^ndsentence should be amended by deleting 'reliability standards' and substituting 'these standards'.	No change. That interpretation is hard to see. Agreed (2^ndsentence amendment)
Paras 98 and 101 – Transpower – believes it would be helpful if the policy intention with respect to the SOO (that is it is an information document) were expressed more clearly and recommends	No change. Status of SOO and linkages are clear.
amendments to these paras.
Para 100 – Vector – Important that grid expansion can occur in a timely manner and welcomes clarity on the roles. Agrees Transpower should have responsibility for the detailed planning role while the commission should review and assess compliance with the EGR criteria.	Noted
Para 100 - Genesis – uses the term 'non-transmission alternatives' but the heading above para 111 is "Transmission Alternatives". Are these the same or different ? If not different then the term "transmission alternatives" should be used as this is defined and used in the EGR2003.	Remove 'non-'.
Para 101 – Transpower – the proposed changes could be interpreted to mean the Commission has a role in the development of grid plans prior to submission. Recommends the original wording of para 87E of the 2006 GPS be substituted for the 1^stsentence.	No change. Interpretation is hard to see.
Para 101- EC - no longer requires that Grid Upgrade Plan (GUP) analysis must be able to be replicated by stakeholders. This replication requirement is important to the transparency and credibility of the process and needs to be retained.	Agree. Word removed in error, and will be added back in.
Para 103 – ENA – add the word 'timely' before the word 'determination'.	No change - Unnecessary.
Para's 105 and 106 – EC - are these still required now that the grid upgrade investment review policy (GUIRP) has been developed in conjunction with Transpower. If para 106 is retained, it should be amended to more accurately reflect the Commission's role, which is to consider and approve (or decline) investment proposals from Transpower. Transpower is responsible for securing the interests, designations and consents described in the paragraph. The Commission cannot ensure that this takes place, as indicated by the current wording.	Noted. Para 105 reworded to convey need for timely planning and securing of consents. Agree para 106 needs to reflect EC and Transpower roles in process. Reworded.
Para 106 – MRP – does not consider the	Noted. Para 106 to be amended as

GPS is the appropriate mechanism for achieving consents, land interests and designations in advance of urgent [transmission] needs. The appropriate vehicle may be the Transpower's SOI or letter from Transpower's Shareholding Minister.	above.
Para 110 – ENA, Vector – add ', and also the different levels of supply security that multiple lines may provide.' at the end of the para.	Noted. This section is on environmental effects. Consideration of diversity of supply is in para 89.
Para 111 – ENA – 1^stbullet replace the word 'grid' with 'supply'.	Remove word 'grid'
Para 112 – Genesis – delete as generally accepted Commission will not be undertaking further work on this and if any funding forthcoming this would be via Transpower.	No change.
Para 113 – 115 – Genesis – amend to reflect that matters have moved on in this area.	No change
Para 115 – ENA – 2^ndbullet amend to 'including distributed generation, energy efficiency and demand management options, and combinations of those options'. - the proposed cost recovery and pricing principles are not consistent with the principal objectives and specific outcomes outlined in s.172N of the Electricity Act 1992. The principles are based purely on economic and allocative efficiency principles with no recognition of the principal of 'fairness'. Consider a framework, and subsequently reliability standards, should be developed for evaluating what might be a 'fair' approach to grid reliability.	Agree No change - believe they are consistent.
Transpower – recommends the GPS include a specific requirement that a 5% pre tax real discount rate be used as the basis for all grid investment test analyses of grid upgrade plans.	No change - not government policy

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Printed: 26/11/2009