Fran O'Sullivan: Lights out while Government fiddles

Whose head will roll over Auckland's power failure? Surely not the usual suspects that the Prime Minister will isolate in her singular way once officials produce their butt-covering reports, if past performance is anything to go by.

Helen Clark is right on cue to order a report. She is right on cue again to slap Transpower where it hurts over this sublimely stupid act of incompetence which has left Auckland hanging by a single power thread for some eight years after it was obvious to anyone with half a brain that the country's commercial hub needed a backup.

But it is action that's required, Prime Minister, not more reports into the reasons why this country seems to suffer so-called one in 100-year events when it comes to our energy security with eerie frequency.

It's not as if the private sector hasn't been ramming the message home. The Herald's Mood of the Boardroom survey last year reported that 94 per cent of CEOs were concerned about the future of the energy supply.

Nearly two-thirds feared their business operations or future investment intentions would be adversely affected by supply worries or rising prices.

There was widespread unease that the Government had duck-shoved the controversy over bringing new electricity pylons from the Waikato to service Auckland by parking the matter until after the election.

"The high voltage investments in transmission and distribution are already 10 years behind Auckland's requirements," said one chairman with first-hand knowledge.

Another pointed to comments by Meridian Energy's Keith Turner when he said that "as a nation we need to start counting options in rather than counting everything out".

There was concern that the Government's "laissez-faire" approach would result in a future crisis with suboptimal decisions made in haste.

During Auckland's last major blackout, in 1998, many felt the four weeks of trouble had to be a oncer. That outage was caused because four lines into the city were not strong enough to cope with the jump in current as air-conditioners ran overtime in the sweltering heat.

One line fried then others followed suit as they tried to cope with demand.

The seeds of this latest disaster are different but also remarkably similar. As energy consultant Brian Leyland points out, this market failure should have been tackled.

It is clear that Auckland came perilously close to another power supply disaster early last year as demand surged in a late-summer heat wave. Local body officials were privately asked not to ramp up consumer fears. But there were some tense moments before the danger period subsided.

Inevitably Transpower CEO Ralph Craven and chairman David Gascoigne will face strong questions over their failure to prevent Monday's fiasco.

But Transpower's planned Whakamaru-Otahuhu transmission upgrade would not have saved Auckland this week, even if it had been ticked off a couple of years back.

The lead times are too great. And, in any event, what is needed is backup capacity at generating and transmission level to protect Auckland, not simply a national grid upgrade which will take bigger capacity.

The Cabinet's infrastructure committee was studying all these issues two to three years ago when the private sector started getting antsy about the lack of progress.

Finance Minister Michael Cullen was loath to take an openly interventionist stance but the Government must sort out the situation before the slightest Wellington-type gale tips more vital lines over.

Why didn't the Government simply pass special legislation back then to give Transpower the okay to mount its $10 billion upgrade of the grid?

Otherwise it has to negotiate planning consents, with the resultant backlash from citizens who just happen to be voters as well. Get the picture?

Back then there were warnings that the Government would come under increasing pressure to intervene to ensure growth was not hindered.

The Government's response was to kick the $500 million pylon plan into touch until well after the election.

Then Energy Minister Trevor Mallard took the political football from Craven and threw it into the hands of Electricity Commissioner Roy Hemmingway, with a signal that he did not want to see it back in play again until the middle of the following year. Which is about now.

Craven showed some mettle by warning that Auckland's power supply would be at risk from 2010 if Hemmingway's investigation into alternatives to the pylon project took too long.

It did and the supply is still at risk. Mallard's push included looking at building power stations closer to Auckland, controlling demand and other transmission lines options.

But still nothing has happened.

The problem is that the electricity sector is neither fully privatised nor under the state's thumb from a central planning perspective.

The industry admits this and says if the Government wants to run with the rival alternative - new power plants in Auckland and subsidised energy efficiency measures - there will need to be recourse to central planning to bring it all together.

Hemmingway doesn't have the right tool box to put the alternatives in place. The Government does and that's where Clark's report should begin.

If the Cabinet doesn't have the fortitude to take tough action soon, then it should have a good look at new generation. Its own.