Competition watchdog to fast-track $31m emergency spend
The Commerce Commission will fast-track an application by Wellington Electricity to spend an extra $31 million to improve the network in case of earthquakes.
After months of discussions between government officials and the Hong Kong-owned lines company, the competition watchdog confirmed yesterday it was being asked to spending.
It would see more than 160,000 households face another $18-$23 on their annual power bills to buy emergency hardware, mobile substations, improved IT and communications systems and even strengthen unreinforced masonry on several buildings.
‘‘[Wellington Electricity] has identified approximately $31m of expenditure that it could immediately consider extra capital undertake in order to increase its network’s resilience to a significant earthquake and enable it to more quickly restore supply to customers,’’ the Commerce Commission said.
Greg Skelton, chief executive of Wellington Electricity, said the investment was aimed at assisting the response to disaster.
‘‘If we don’t have the readiness in place, and something does happen, then you expose a lot of people to a lot more damage.’’
Skelton said that after the earthquake last November, the company was approached by officials from the Ministry of Business, Innovation and Employment about what it could do to improve its resilience.
‘‘That sort of crystalised a more active conversation.’’
While the underground network was among the most resilient in the country, in a major quake the network could be split into five parts ‘‘each cut off from the other and from the control system’’, Skelton said.
‘‘Our modelling suggests that if the quake occurred tomorrow, 60 per cent of power supplies to Wellington, Hutt Valley and Porirua could be lost immediately, and up to 35 per cent of it could still be disrupted weeks to months later.’’
Spending plans of regulated monopolies such as lines companies are usually determined years in advance through highly contested processes. Because the companies are able to charge customers a return based on asset base, it creates an incentive to spend as much as possible.
A decision on the application is expected to be finalised before the end of March. Skelton said if the spending was approved, the added cost would feed into electricity bills in either April 2018 or 2019.