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Errors delay new electricity price plan

NZ Newswire logoNZ Newswire 26/04/2017

A new transmission pricing model for electricity has been put on hold until after the election.

The Crown-owned Electricity Authority has dumped a cost benefit analysis carried out as part of their attempt to divide national grid power costs, blaming a series of errors in model documents.

Chief executive Carl Hansen says a new analysis is the only way forward after mistakes were found in the original work-up by Australian consultancy firm Oakley Greenwood in February creating confusion in their decision-making.

"We found errors in cell formulas, there were also incorrect assumptions about generation costs, retirement of certain generators, transmission charges and the location of new generation plant," he said on Wednesday.

"It wasn't clear that the result of this cost-benefit analysis were an over estimate, an under estimate or about right."

The authority is considering seeking costs from Oakley Greenwood for the work, among other options.

While a final decision on the model was expected before the September general election, a final decision on the new model is now not expected until early 2018.

The plans for a new transmission pricing model have been controversial, attracting the ire of lobbyists and New Zealand First leader Winston Peters, who is concerned about the impact changes would have on his Northland electorate.

He said on Wednesday that the proposal alone had cost hundreds of jobs and led to the planned Kaikohe pulp mill being shelved.

Mr Peters wants the Electricity Authority to drop its plan altogether.

"The Electricity Authority has only been made to kick this proposal into the long grass of 2018 which, of course, is post-election," he said.

But the authority is intending to proceed.

"The current methodology encourages transmission customers to make wasteful investments merely to shift costs onto others," Mr Hansen said.

"This activity results in higher prices for consumers who are unable to adjust their electricity demand, and technology developments are likely to magnify these problems in the near future."

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