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Ruapehu Alpine Lifts is proposing setting up its own customer electricity network on the Whakapapa side of Mt Ruapehu to save on lines charges from the local monopoly provider The Lines Company - and it's guaranteeing customers will pay less.
The Lines Company's charging method, which takes a customer's peak electricity demand and charges them for that year round, has long been a subject of bitter dispute in the area it services from Otorohanga to Ohakune and across to Turangi/Tongariro.
Ruapehu Alpine Lifts (RAL), which pays $1.4 million per annum in lines charges and is one of the biggest electricity consumers in The Lines Company's distribution area, is proposing setting up its own Whakapapa customer network. The network would provide electricity distribution to all existing The Lines Company customers in Whakapapa Village, Iwikau Village at the Top of the Bruce, and Whakapapa Skifield, about 164 connections in all.
The Whakapapa customer network would be supplied by The Lines Company's existing network, RAL chief executive Ross Copland said.
"Instead of having 164 small connections to [The Lines Company's] network there will be one large connection and RAL will supply the members of that customer network."
A RAL consultation document released in December says most ski areas in New Zealand already manage their own 11kV distribution networks. The advantages of a RAL-owned customer network would be a lower cost of electricity to users, RAL-managed maintenance and operation of the network, a fair and transparent pricing method and a guaranteed lower network charge for every customer.
RAL needs 100 per cent of the customers supplied by the existing Lines Company network in Whakapapa to agree to join the new customer network in order for it to be possible, and once joined, there will be no possibility of opting out.
To set up the network, RAL must first buy The Lines Company's assets between the Tawhai Substation and Whakapapa Ski Area. If agreement can't be reached, RAL will have to install its own electricity infrastructure.
Mr Copland said he has a good relationship with The Lines Company chief executive Sean Horgan and was confident the two companies can come to an agreement, although there was a lot of discussion still to be had.
Mr Horgan said The Lines Company would not sell its Whakapapa assets but was willing to work with RAL.
"RAL have the prerogative to go through and look at alternative options as does any customer," Mr Horgan said. "From our perspective, going through and divesting the assets is off the table, but we're exploring a number of options and if there are things that we can do together in order to lower the cost of supply, such as employing new technology, then we're happy to work with RAL and look at those."
Residents and business owners in The Lines Company's distribution area have battled for more than a decade for a fairer charging system. That has included complaints to the Electricity Authority and the Commerce Commission, discussions with local councils and MPs and a petition to Parliament asking for a public inquiry, which was declined.
The Lines Company recently undertook an independent review of its price charging system, which recommended moving to a new system. The Electricity Authority in May also concluded that The Lines Company's pricing system created uncertainty and stress for consumers.
The Lines Company's 2016 annual report shows the company made $7.4 million in profit and paid $5m in dividends. The company is owned by a community trust.