Transpower cable $53 million boost for Vector

Transpower will lay a 220kV cable through the 9km Penrose to Hobson St tunnel which was built in 2001. Photo / Brett Phibbs

Vector stands to make $53 million from Transpower to lay high-voltage cable through its Auckland isthmus tunnel and North Shore transmission corridor.

Vector chief executive Simon Mackenzie said the payment, due to be made in two instalments, would be part of general revenue.

The 9km long Penrose to Hobson St tunnel is about 3m in diameter and was built in 2001 to improve security of supply into the Auckland CBD.

Mackenzie said the agreement was expected to become unconditional in May next year.

He said the payment was an "appropriate commercial consideration" for use of the tunnel and corridor. There would be no rent paid.

"What's really good about this is that it's better than having to dig up the streets of Auckland and delaying major cable work."

Transpower would lay a 220kV cable through the tunnel in addition to the 110kV and 33kV cables already serving Vector's network.

Transpower chief executive Patrick Strange says the agreement is a good outcome for consumers in Auckland and Northland. "This cable is a vital component of our North Auckland and Northland project to reinforce the electricity supply to customers north of the Auckland isthmus."

In a separate announcement Vector said it had estimated a boost in after tax net profit of $20 million in the year to June 30 as a result of tax changes in the Budget.

However, a move in the Budget to make capital contributions taxable from May 20 would reduce net profit for the 2010 year by an estimated $1 million. Vector shares closed up 3c at $2.14 yesterday.