11 Oct 2012

Scheme aims to decide funding for power projects

9:10 am on 11 October 2012

The Electricity Authority has devised a new scheme to overcome complaints that the electricity industry funds its own developments unfairly.

Projects such as the Cook Strait cable upgrade currently underway are charged overwhelmingly to South Island electricity generators, who say this is unfair.

On Wednesday, the authority told 50 industry representatives about a new scheme, technically known as SPD, which will use detailed techniques to allocate costs proportionate to the benefits.

The authority says the price of sending electricity around the country will rise by 79% in 10 years and it is important to allocate costs consistently.

It hopes the new method will end grumbles and make it easier to decide which projects should get the go-ahead and which ones should not.

Electricity Authority chief executive Carl Hansen says there has been a lot of controversy about the way the high voltage direction current (HVDC) and interconnection charges are levied, as well as debate about who benefits from different parts of the grid.

"So what we've done is come up with a method where we're going to identify - explicitly identify - parties' benefits from various parts of the grid and charge them accordingly".

Mr Hansen says it will shift the focus on how to calculate the private benefits and charges, as well as increasing the scrutiny over the viability of various transmission investments.

The scheme is open to consultation.