'No one contacted us' says Electricity Authority over blame for shelved Kaikohe pulp mill

The Electricity Authority says the current system for paying for power transmission is "flawed and unsustainable".

The head of a government agency blamed for scuttling a pulp mill that could have brought 200 jobs to Kaikohe says he's surprised no one involved with the project contacted him about it.

Northland Inc, however, says it made a submission to the Electricity Authority (EA) against its proposed power price changes and their detrimental effect on Northland's economy.

Last week the Advocate revealed that Northland Inc, NZ Trade and Enterprise and the Ministry for Primary Industries had shelved plans for a $300 million pulp mill which was to have been built in a new industrial park at Ngawha.

The mill was part of the Government's Economic Action Plan for Northland unveiled in February, which led Far North Mayor John Carter to conclude one hand of Government didn't know what the other was doing. Losing the mill and badly needed jobs was "a bloody disgrace", he fumed.

The main reason given was uncertainty over future power prices caused by EA plans to change the way New Zealanders pay for power. The proposal could see users in Northland pay significantly more while those close to the country's biggest power stations will pay less.

EA chief executive Carl Hansen said if uncertainty caused by the Transmission Pricing Methodology review was a factor in shelving the mill, he was surprised no one got in contact to discuss it. Consultation on the latest version of the review started yesterday.

"I welcome those involved with this project to participate in that process so we can understand their forecasts and offer any clarification needed," Mr Hansen said.

He said the proposed changes aimed to fix the current "flawed and unsustainable" system, where other regions - some also having people struggling to pay their bills - paid higher power prices even though they didn't benefit from extra investment in the transmission network. The EA took into account the effects its decisions could have on industry through the consultation.

Northland Inc chief executive David Wilson said his organisation made a submission in July against the EA's power pricing review. While the submission did not go into the pulp mill specifically it did address the proposal's ''inequity and damaging effects on economic development in the North''.

Northland Inc had also asked to make an oral submission but had not had a response.

The EA needed to consider unintended consequences, such as the effect on regional economies, when coming up with complex proposals like its transmission pricing review, Mr Wilson said.

Asked why Northland Inc didn't wait until the EA review was out before shelving the mill plan, Mr Wilson said when the pre-feasibility report was completed early last month there was no date set for the release of the EA review.

Waiting wasn't an option because there was a "high degree of anticipation" from the many stakeholders involved in the report.