Authority considers Code amendment to improve the TPM

The transmission pricing methodology (TPM) is the method used by Transpower to calculate transmission charges.

In 2022, the Electricity Authority Te Mana Hiko amended the Electricity Industry Participation Code to include a new TPM to ensure transmission charges are allocated efficiently between transmission customers.

The Electricity Authority is committed to making sure the methodology promotes efficient investment in generation. Information recently received indicates this may not be happening for all new customers.

We are concerned the adjustment formula for calculating benefit-based charges for new customers under the TPM’s “simple method” is not working as intended for some generation types in some parts of New Zealand and this may deter or delay investments.

Transpower has proposed an amendment to the Electricity Industry Participation Code which may provide a solution to the issue. We are currently considering the amendment request as well as any other solutions to this issue. We intend to consult on a solution(s) in early 2024 and, subject to Board approval, make a decision as soon as practicable after submissions have been considered.

Transmission pricing methodology is not straightforward, and we anticipated having to make minor amendments as the new TPM was implemented.

We will continue to work closely with Transpower and the Commerce Commission to ensure amendments are considered and completed in a timely manner.