11 August 2015

EA proposal to increase transmission costs for Aucklanders by 59%

The Auckland Energy Consumer Trust (AECT) is calling on the Electricity Authority (EA) to remove the historic bias in transmission pricing which currently sees customers, rather than electricity generators paying the majority of the cost to transmit electricity from often remote generation sites to cities and towns across the country.

AECT Chairman William Cairns said such a change should reduce customers’ overall energy bill by 2-3%, and for Aucklanders should provide an average annual saving of nearly $100 per customer, rather than the increase of 59% in transmission prices currently being proposed by the EA for customers on the Auckland network.

In a submission to the EA released today, the AECT expressed their opposition to all of the proposals being suggested by the EA in its latest options paper and instead supported a report by international experts, which was commissioned by Vector and sets out an alternative transmission pricing methodology. The alternative option would spread transmission costs fairly across all beneficiaries of the national grid and result in a reduction of 2-3% in overall energy bills as opposed to the EA proposal which has consumers paying a higher share of transmission costs.

Mr Cairns says the EA proposals were radical, complex and untested and would result in small consumers being financially worse off while electricity generators and large industrial consumers would benefit financially from the proposed EA changes to the tune of $23m and $74m per year respectively.

“The EA proposes calculating transmission prices for generators differently to consumers which would mean that customers will pay more. The AECT does not support any proposal that results in such an unfair redistribution of transmission costs, from customers who are least able to afford it to major corporate consumers and generators.

“The concept is unfair to consumers – it is not reasonable for electricity generators to only pay a small amount to send their product, electricity, to big cities such as Wellington and Auckland. As an analogy, a Southland farmer wanting to send his product to Auckland knows he has to be cost competitive and one of the costs he has to take into account is his cost of transport – he doesn’t expect Auckland customers to cover that cost.

“We know from interaction with Trust beneficiaries, that many families are struggling to make ends meet and we believe an option which would see overall energy costs reduce rather than increase should be carefully considered by the EA,” he said.

-Ends-