John MacDonald: Is user-pays being taken too far?

We'll be chewing through the power in the south this week with the frosty weather.

Which is the "ideal time" for Transpower to reveal that the budget for a major upgrade of electricity transmission lines in the South Island has increased again and that South Islanders will be paying for it.

Which raises the question: Is this taking user-pays too far? And I think it is.

What’s happened, is Transpower is upgrading its lines north of Twizel. Because, the way things are going, they won’t be able to cope with increased demand for power in the next few years.

But it’s going to mean higher power prices for those of us in the south. Because Transpower says we’re the ones who are going to benefit the most.

This is at the same time as new data from Statistics NZ shows power prices have gone up 6.2 percent in the past year and Consumer NZ says one-in-five people have had difficulty paying their power bill in the last 12 months.

Transpower’s original budget for the upgrade project was $77 million; earlier this year it increased to $164 million; and today we’re finding out that it’s sitting at $193 million.

The project is being driven by growing electricity demand because of population growth, electrification of industry and transport, and new developments in Christchurch and Selwyn.

If nothing’s done, the grid won’t cope and we could see the system overloading within the next five-or-so years.

But I’m with the likes of Westpower's Mark Blandford, who supports the project but isn’t happy at how costs are being allocated to South Islanders, which he says penalises the regions.

John Harbord, from the Major Electricity Users Group, supports the need to invest in the country’s electricity grid but is worried about the impact on power bills.

He says some businesses are finding electricity price rises so expensive that they’re struggling to operate.

Which backs up the case for everyone around the country to be carrying the cost of these upgrades.

Tell that to Transpower, though.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from News Talk zb WE.

Speaker 2 (00:14):
I mean, look at that day, would feel it as well.
We will have been chewing through the power this morning,
another frosty one in Canterbury, which is just ideal timing.
And I'm saying that in speech marks ideal timing for
the revelation that the budget for a major upgrade of
electricity transmission lines in the South Island has increased. Again.

(00:37):
What's more galling though, is the fact that us South
Island is, particularly those of us here in Canterbury, we're
going to be expected to pay most of the cost,
which raises the question is this taking user pays too far?
And I think it is. So what's happened is Transpower

(00:58):
is upgrading its transmission lines north of twice all and
it's doing that because the way things are going, it
won't be able to cope with increased demand for power
in the next few years, as few or as little
as five years, five or six years. But it's going
to be higher power prices with those of us here
in the South Island because Transpower says we're the ones

(01:21):
who are going to benefit the most. This is at
the same time as new data from Statistics New Zealand
shows that power prices have gone up six point two
percent in the past year, and at the same time
as Consumer ENZ says one in five people one in
five people have had difficulty paying their power bill in

(01:41):
the last twelve months. So let me run you through
the numbers. The budget for this project. Transpower's original budget
for the upgrade was seventy seven million dollars. Earlier this
year it went up to one hundred and sixty four million,
and today we're finding out that it's sitting at one

(02:02):
hundred and ninety three million. Now on top of that,
those of us here in Canterbury christ Church Selwyn in particular,
we're going to have to pay towards a one point
seven billion dollar overhaul of the local distribution lines run
by Oryan. But as for Transpower, it says most of

(02:23):
the cost of its upgrade is going to fall on
South Island consumers because we're the ones who will benefit
most from it. But is that fair? This is the
conversation this morning. Is that fair? Now? The project is
being driven by population growth, electrification of industry and transports

(02:45):
and more evs and all of that and new housing
developments in christ Church and Selwyn. So all up, more
power is needed. We've got to pay towards the cost
of getting it here, and TRANSPAS says, if nothing's done,
that's what I'm saying about the next five or six,
six years or so. Transpas says, if this work isn't done,
if nothing's done, the grid won't cope and we could

(03:06):
see overloading within the next five or so years. But look,
I'm with the likes of Westpound Network General manager Mark Blandford,
is what he's saying. He supports the project, of course
has to be done. You don't want brown outs and
blackouts and all of it carry on. But he's not
happy at how the costs are being allocated to South

(03:26):
Island regions. He says, quote the challenge that he's talking
from his perspective, The challenge for the West Coast, for example,
is that the way the costs are recovered penalizes the
West Coast and the regions penalizes Canterbury. John Harboard from
the Major Electricity Uses Group, he supports and need to invest,
Yeah yeah, yeah, yeah, but the same he's worried about

(03:46):
the impact on power bills. The way that Transpower is
getting people to cough up and pay for this work.
He says, some businesses are finding electricity price rises so
expensive that they're struggling to operate. And yet this just
backs up my case for everyone around the country to
be carrying the costs of these upgrades. Tell let's transpeer

(04:09):
those who thinks that, because we're in the South Island
and because all the demand is coming from here, and
we've got these big housing developments in christ Church and Selwyn,
and we're the ones at risk of the system overloading.
Because of all that, we're the ones who are going
to benefit most, and so because of that, we need

(04:30):
to pay for it more so than people anywhere else
in the country. Well, here's my question for you. Is
that fair now? I don't think it is.

Speaker 1 (04:42):
For more from Category Mornings with John McDonald, listen live
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or follow the podcast on iHeartRadio.