Northland's biggest lines company says a plan to change the way New Zealanders pay for power was "grossly unfair" because in effect it meant Northlanders would have been forced to pay for upgrades to Auckland's power network.
On Saturday the Advocate revealed the Electricity Authority (EA), a government agency set up to regulate the power industry, had put its controversial Transmission Pricing Methodology review on hold at least until after the election.
The delay came after the 11th hour discovery of a raft of errors in the cost-benefit analysis on which the plan was based. Errors included locating power stations on the wrong island and overstating the Far North's power consumption by a factor of 10.
The stated aim of the review was to ensure consumers paid only for network upgrades they directly benefited from. If it had gone ahead power prices would have increased sharply in Auckland and Northland and dropped in Southland, which is close to the country's biggest power stations.
Northpower, which supplies electricity to the Whangarei and Kaipara districts, is part of a coalition of firms fighting the proposal with backing from Northland councils and business groups.
Networks general manager Josie Boyd said Northpower had always viewed a proposal which effectively required Northland consumers to pay for upgrades of Auckland's power network as "grossly unfair and arbitrary".
The review failed to take into account broader impacts on the regions and, if it had gone ahead, would have lead to a wealth transfer from regions such as Northland.
An analysis by businesses and councils opposed to the plan found Northlanders would end up paying an extra $10.6m a year for power while Pacific Aluminium, which owns the Tiwai Pt smelter, would save $20m a year. Meridian Energy would pocket an extra $57m a year.
Flawed methodology aside, the EA's decision to throw out the cost-benefit analysis highlighted serious doubts about the whole proposal.
"The proposal was a highly theoretical approach to solve a problem many argue does not exist, and adds significant complexity to an already highly complex electricity wholesale market," she said.
National's candidate for Northland, Matt King, said he welcomed the EA's decision to dump its "flawed analysis" of national grid costings.
"I've been consistently of the view that this would be a terrible deal for Northland."
Mr King said he was pleased Energy and Resources Minister Judith Collins had written to the EA the previous week calling for a sensible decision to be reached.
However, when the Advocate quizzed Primary Industries Minister Nathan Guy in February about the EA's review, he said the authority had to work though its processes and the Government couldn't get involved.
NZ First leader and Northland MP Winston Peters, who drove political opposition to the power pricing review, said he had long challenged the EA's methodology but his concerns had been dismissed as politicking or plain wrong. Now the EA had been "found out" it was blaming the firm which prepared the cost-benefit analysis, he said.
The error-riddled analysis was prepared by Australian consulting firm Oakley Greenwood. The EA plans to commission a new one and is considering trying to get its money back for the abandoned analysis.
EA chief executive Carl Hansen said the agency was still committed to reforming New Zealand's transmission pricing system.