Power users in Northland are poised to benefit financially after an exemption secured by Top Energy will save the lines company nearly $5 million a year.

The Electricity Authority has granted the Far North lines company a 10-year exemption to run its power generation and distribution businesses as one entity but an act of Parliament could give the company long-term certainty.

The exemption may not be extended beyond 2027.

Under electricity regulations, any lines company that generates more than 50MW of power has to split off the generation side of business into a separate company.


Top Energy currently owns a diesel generator in Taipa with a capacity of 3.65MW. It uses that generation to maintain network supply. In addition, it owns and operates a 32MW geothermal plant at Ngawha Springs, just east of Kaikohe.

It proposes to acquire more diesel/biodiesel generators and to increase the capacity of its geothermal generation.

Those actions will take Top Energy's generation capacity beyond the 50MW limit which triggers separation and arm's length compliance requirements.

The company applied for and was granted the exemption in September 2017 which meant it would save about $4m it pays annually to Transpower for grid connection and another $1m in operational cost.

However, a Bill sponsored by Northland MP Matt King is aimed at providing Top Energy, with 31,000 customers, longer-term certainty for the expansion of the Ngawha geothermal power station than the present 10-year exemption.

The Far North District (Electricity Distribution and Generation Management Separation) Bill has the support of Top Energy, Far North District Council and its mayor John Carter.

King, a National MP, hopes to enlist the support of other political parties and the public through consultation before taking it to Parliament some time in the New Year.

"It's a win-win situation for Far North power users who already pay some of the highest power charges in the country and where the lines are uneconomical to run in rural areas.

"The National Party caucus has given this Bill the okay and if I can get our opposition parties to support it, it will mean cheaper and better power for our region," King said.

But Regional Development Minister Shane Jones questioned the timing of the Bill, saying the National government had nine years to sort out the issue.

He said the matter of exemption for Top Energy could be picked up during the Electricity Price Review.

"My advice to the Top Energy board is to stop talking exclusively to the National Party. Talk to the government. I think it's incredibly naive of them to get opposition support on something like this," Jones said.

Top Energy spokeswoman Philippa White said the Bill was a result of various discussions King had with the lines company, Carter and Far North councillors.

"Without this certainty, the company has to consider the grid connection option, but this will add $4m to the power bills of the power consumers/public of the Far North as a pass-through cost – which we wish to avoid."

She said the FNDC was also keen to avoid those costs for the benefit of its ratepayers.

Any cost savings by Top Energy are likely to be passed on to power users through a reduction in line charges, although Top Energy hasn't confirmed such a move as yet.

Currently, Ngawha generates approximately 70 per cent of the electricity supplied across Top Energy's network. Ngawha's increased capacity will meet 100 per cent of the electricity needs of all consumers on Top Energy's network.