Cabinet moves could spell end for Transpower

David Parker

The Government has threatened a return to centralised planning of the national electricity grid if the Electricity Commission and Transpower are unable to resolve their differences over the controversial 400kV power line through the Waikato to Auckland.

It said if the present "stalemate" between Transpower and the commission continued, the Cabinet could take decisions on grid upgrades, the Minister of Energy David Parker said in a Cabinet paper.

Such a move could spell the end of Transpower in its present form and the demise of the Electricity Commission, which began operating just over two years ago.

The other alternatives put forward by Parker include shifting grid planning from Transpower to an independent body, providing an integrated process for economic, environmental and land access issues or even directing the electricity commission to approve individual projects.

The paper was Parker's contribution to the Government's national infrastructure policy statement, a key policy directive to the Electricity Commission and the Commerce Commission that was released on Monday.

Coming just a day after the Commerce Commission said it would impose price controls on powerlines company Vector, it has fuelled fears of regulation stifling private investment in infrastructure.

These fears have hit the sharemarket, yesterday knocking another 8c off Vector to $2.30, an all-time low. Since the commission disclosed its plan, Vector has lost $350 million, or 13.5 per cent, from its market value.

The Major Electricity Users Group, a lobbyist representing the interests of companies such as Fletcher Building and New Zealand Steel, said the paper represented a step back to the days when Government pushed through big projects often at great expense to the taxpayer.

"The Cabinet paper is a shocker," said executive director Ralph Matthes.

"The fact that the Cabinet paper was even considering this is possible shows how far backwards we have gone."

He added Parker's comment that the Government could direct the Electricity Commission to approve projects highlighted the vulnerability of the regulator to the Government's whims. He said the commission needed to be given statutory independence.

Parker said the move did not represent a return to centralised planning. It was an option only. It was a way through an impasse that the Government would take reluctantly.

"We really don't want to see it come to that, but if the alternative is the lights going out, then we'll do it," he said.

In the paper, Parker also underscores Government dissatisfaction with the delays over the 400kV line.

"The approval process has proven fraught and contentious. There appear to be many reasons for this including relationship issues."

Parker also released a letter to Transpower repeating his dissatisfaction with the approval process and criticising planning over the line.