Pricing the cost of electricity transmission from the main power generators in the South Island to the North Island and further afield has been a challenging issue for many years. More recently this discussion has been framed under the Transmission Pricing Model.
Over the years there have been many arguments around transmission prices being able to vary from region to region.
This includes the increased cost of supply the further one is away from the generators in the South Island, to the national good where generators and transmission lines were funded by all New Zealanders everywhere through general taxes.
The core argument, that the further away from the generators in the South Island the more one should pay does, of course, have the most impact for us here in Northland as we are the furthest away.
Last week policies were announced that add some clarity to this and sent me to the Minister's office and MBIE looking for more specific implications for Northland.
Here is what I found. The table below shows cost per North Island region in KWh. As can be seen, Whangārei sits in the middle of the pricing pack and Kerikeri is the most expensive.
The minister confirmed that Northpower's transmission charges would increase by about $8a year for the average residential annual electricity bill.
The guidelines also place a price cap on any increase in transmission charges to no more than 3.5 per cent of the total electricity bill as at 2019/20. This would seem to contain costs for Whangārei residents, however large electricity users such as NZ Refining confront a different situation.
It has been explained to me that the increase in transmission price could increase costs for the refining company by millions of dollars. This is at a time when we have concerns around the future of NZ Refining anyway. Farmers could also bear a significant increase in costs, especially dairy farmers with electricity-intensive milking sheds.
One thing this policy does is to further support interest and investment into our own regional power generation capacity such as the geothermal development at Ngawha. This is an exciting prospect and I hope that all current and previous electricity-generating proposals for Northland are dusting off their business cases and re-examining their viability. In my view, the more sustainable electricity we can generate in Northland for Northland the better.