Problems in the powerhouse

By CHRIS DANIELS

Transpower has a problem on its hands. The state-owned enterprise that owns and runs the national electricity grid must convince the public that a massive upgrade is crucial - that $1.5 billion must be spent and work must start very soon.

"Given planning and construction timetables, we have to start now," says Ralph Craven, Transpower's chief executive.

Public opinion must be softened up. People need convincing that the Resource Management Act must be changed, that bulldozers and compulsory land purchases are the unavoidable downside of a vital modernisation.

Along with this problem comes the need for Transpower to answer the natural suspicion that things should never have got this desperate.

Ask the people of the upper South Island about the national grid. Last week they were told that their power may be turned off on very cold evenings, since the transmission lines feeding their area may no longer be able to cope with the load.

Transpower was accused of scaremongering, frightening consumers with threats of cold showers to rustle up support for its pet projects - which naturally means erecting hundreds of pylons and stringing high voltage cables.

News of problems came just one week after the new Electricity Commissioner Roy Hemmingway said the country would be safe from power cuts this winter and next, barring any unforseen breakdowns.

Hemmingway later said he was "surprised" by the Transpower news, as was Energy Minister Pete Hodgson.

Greens co-leader Jeanette Fitzsimons, who for the past few decades has followed the energy sector more closely than most, immediately smelled a rat.

It was "inconceivable that Transpower could have been unaware of a transmission constraint that is really this urgent", she said.

Either Transpower had been quiet until it suited its purposes to tell the public, or it was not as urgent as claimed.

Transpower chief executive Ralph Craven this week issued a statement that had all the hallmarks of starting out as an apology, before being rewritten and softened up by a committee of lawyers.

It says he "expressed regret to consumers in the upper South Island for the current uncertainty over electricity supply this winter".

The concern that this issue had raised was "very regrettable".

Regrettable for South Islanders no doubt, but one positive aspect was the spotlight being swung dramatically onto Transpower's plans for the national grid upgrade.

Critics of Transpower say one of the big successes of these tactics has been the Government's acceptance of a new "national-interest clause" to be inserted in the RMA. Transpower hopes this will ensure the need to keep lights burning and be treated as much of a consideration as local environmental protection.

The crisis with the grid has been brewing for some time.

Ever since the completion of the Clyde Dam and an upgrade to the Cook Strait cable, , consumers have lived off the fat built into the system.

Electricity Networks Association chief executive Alan Jenkins says: "For a long time now, there's been a growing sense of impending doom, where investment is just not occurring, really we've seen bugger all investment since Electricorp was formed."

Now Transpower faces the unpalatable task of seeking public approval for a system-wide overhaul.

The biggest project is a new line from Whakamaru in the Waikato to Otahuhu, which Transpower says needs to be be ready by June 2010.

This line, which will likely cut a swathe through built up urban areas, will be the biggest single power transmission project in 40 years.

The plans require Transpower to acquire access to about 220km of land, 65m wide. Around 700 new transmission towers need to be built. It will, for the first time, be seeking easements - rights over the land beneath the pylons.

Houses and land will need to be bought and community opposition in some areas can be almost guaranteed. Three possible route options will be announced later this year.

Craven has won plaudits for his handling of the problem.

Electricity Networks Association's Jenkins says Craven is a "breath of fresh air" - someone who finally stopped waiting for others to do something and is pushing for the crucial investment.

But the solution is far from simple.

When New Zealand had all parts of the power planning done in the same organisation, it was easier to integrate the transmission needs with the generation.

Dams and transmission lines were planned and built by the same agency. Problems such as those it is facing at Otahuhu never occurred.

When the core grid was built in the 1950s and 60s, for example, easements were not required, as the Public Works Act gave them powers to build national infrastructure.

However, new legislation such as the Resource Management Act, the separation of transmission and generation, deprived national grid planners of the ability to command and control events from Wellington.

The Government's big hope is the creation of the new Electricity Commission under American Hemmingway will connect the wires.

Energy Minister Pete Hodgson has given Hemmingway the job of re-establishing a greater degree of central control over a system that has never before been so fragmented.

He has been given a wider field of authority than Transpower. It is his job to approve these billion dollar plans, but only after investigating whether there are alternatives to throwing up more high-voltage wires.

"There is no issue in electricity that is solely a transmission issue," says Hemmingway.

"If there was a power plant on every corner, there wouldn't be a need for a transmission system at all."

Asked about Transpower's planned line from the Waikato to Otahuhu, Hemmingway says he has yet to get any application about it, so it is too early to say whether it might be a good idea.

Is there cause for concern about the state of our transmission system?

"I think there is. If we don't do anything, I think there's evidence we will continue to have more problems like the one that's cropped up in the upper South Island this winter."

Hemmingway faces several problems when Transpower presents its case for a big upgrade of the national grid, one of which is the likelihood of competing solutions actually being achieved.

For example, some are proposing a coal-fired power station on the West Coast, which would remove the need for a big lines upgrade into Christchurch.

The Electricity Commission will evaluate this option - but it cannot actually build this station. That decision is being left up to the generators - such as Contact, Trustpower and the big state-owned companies, Meridian, Genesis and Mighty River Power.

Hemmingway refers to this as "somewhat of a bird in the hand dilemma" for the commission, since Transpower will present a proposal ready to be implemented, while the alternative (such as a new power station) has much more uncertainty.

So the phoney war is now over: Transpower's plans are being fine-tuned and opened up to public scrutiny. The players are ready for action, with a new commissioner ready to start exercising some centralised power unseen in the energy sector for more than a decade.

At stake in this fight is more than policy principles and economic theories - if things drag on too long the lights may be out before the bulldozers even start their engines.