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Auckland CBD Cable Ducts IGE applications - history

On 14 November 2005, the Commission received an application from Transpower seeking approval for up to $7.81 million of interim grid expenditure under rule 16 of section III of part F of the Electricity Governance Rules 2003.

Auckland CBD Cable Ducts IGE application – stage I (November 2005)

The expenditure was in relation to “prudent expenditure on preparatory work” for a project to install two 220kV cables between Penrose and Albany substations in Auckland to reinforce transmission capacity into the North Shore and Northland region (Auckland 220kV CBD Cable Ducts Project). To ensure the timely completion of the cables, Transpower installed ducts under the Transit Busway and other key parts of the cable route to secure an end-to-end route. That IGE application was referred to as the Stage I Application.

The investment was made in a number of stages and Transpower planned each stage of the project so that it was subjected to separate financial approval. Transpower’s application was for $7.81 million to construct cable ducts under Westhaven Drive as the next stage of preparatory works.

The Commission requested further information from Transpower. This was provided on 16 December 2005.

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  In accordance with rule 16.4.2, the Commission decided to give interested parties a short period of three weeks in which to provide submissions about its indicative decisions in respect of the Stage II Application.

  Submissions closed on 18 July 2006 and the Commission received five submissions.

  Having assessed the application against the requirements of rule 16, the Commission, on the 13 October 2006, approved IGE of the lesser of $9.36 million or the actual nominal cost of the project at the time of commissioning (i.e. the capitalised book value). Accordingly, under rule 17.1, Transpower could recover from designated transmission customers the lesser of $9.36 million or the capitalised book value of the project.

  The remaining $7.14 million in Transpower’s application related to interest during construction (IDC) and contingency costs for the entire Auckland 220kV CBD Cable Ducts Project. This included IDC and contingency costs for sections that are not directly related to works described in the Stage II Application and for which the decision to proceed had already been made by Transpower’s Board before the part F regime was in place. Furthermore, construction on these sections was already well underway. Therefore, the Commission considered that this remaining $7.14 million was not appropriate for the Commission to approve under rule 16.

   

Having assessed the application against the requirements of rule 16, the Commission decided not to exercise the discretion available to it under rule 16.4.2 to consult with interested parties, and, approved, at its 20/21 December 2005 meeting, IGE of the lesser of $7.81 million or the actual nominal cost of the project at the time of commissioning (i.e. the capitalised book value). Accordingly, under rule 17.1, Transpower could recover from designated transmission customers the lesser of $7.81 million or the capitalised book value of the project.

Auckland CBD Cable Ducts IGE application – stage II (May 2006)

On 22 May 2006, the Commission received an application from Transpower under rule 16 of section III of part F for approval of IGE, related to further preparatory work for the Auckland 220kV CBD Cable Ducts Project. That IGE application was referred to as the Stage II Application.

The Stage II Application sought approval for a further $16.5 million of IGE and was submitted under rule 16.2.3.2 – “prudent expenditure on preparatory work necessary for other grid expenditure that have [sic] not yet been approved in a grid upgrade plan”.

The Commission requested further information from Transpower. This was provided on 26 June 2006 and 25 September 2006.

This page is related to: Transmission.

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