A Government threat to return to centralised planning of the national electricity grid should not be dismissed, Electricity Commission chairman Roy Hemmingway has said.
Hemmingway said the threat - disclosed in a Cabinet paper discussing a new directive to ensure regulators' actions do not discourage investment in infrastructure - illustrated
Government frustration with delays on the controversial 400kV powerline through the Waikato to Auckland.
"The Government is certainly thinking beyond the prospect that Transpower may not give us something that we can approve," Hemmingway told the Herald.
He laid blame for the delay at Transpower's feet, saying the commission had acted entirely within the directives it had been given by the Government. In April, it had to reject the line because the proposal was not the least-cost alternative.
The Electricity Commission rejected the $500 million plan, saying an investment of $140 million in the existing network - and perhaps the construction of new power stations near Auckland - would delay the need for the planned 400kV line at least until 2017. It is now, however, discussing a lower cost alternative with the grid operator that could quickly be upgraded to 400kV.
"I do not see the [Cabinet paper] as a criticism of anybody," said Hemmingway.
"No one has told us that we should be doing something different fundamentally from what we have done. We are reliant on Transpower to give us a proposal that will meet the requirements. We cannot create a proposal that will meet the standards. We never should have got into this position where we had to issue a draft 'no' decision to the grid upgrade."
He said that if the Government did act to take control of grid planning it was "quite possible" it would spell the end of the commission but it might also spell the end of Transpower.
Meanwhile, electricity line company Vector has engaged high-profile lawyers Chen and Palmer to lobby on its behalf against the Commerce Commission's plans to impose price controls.
It yesterday released a letter from its lawyers to commission chairwoman Paula Rebstock that "clearly refutes a number of allegations made publicly by the commission".
The lawyers said the commission's decision was inconsistent with its previous conduct, "and therefore unfair and unreasonable".
- Additional reporting NZPA
