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Enabling investment and innovation

Transmission pricing methodology

The transmission pricing methodology is the method used to calculate transmission charges (the money that Transpower receives to fund the grid). It ensures transmission charges are allocated efficiently between transmission customers.

  • Distribution
  • Transmission

    • Overview

    We are making changes to the transmission pricing methodology to create a more level playing field for emerging energy storage technologies, like grid-scale batteries, connecting to the grid.

    Earlier in 2024, we identified an issue in the way charges are allocated that causes disproportionately higher charges for new energy storage technologies compared to other types of connections. This was a concern, because battery energy storage systems and other technologies have potential to provide significant consumer benefits by improving network resilience and security of supply.

    In August 2024, we consulted on amendments to the transmission pricing methodology to change how these charges are allocated and create a level playing field for connecting these new technologies to the grid.

    We’ve decided to progress these changes (effective 1 April 2026) to better allocate connection charges for shared connection assets and make residual charges more consistent across grid customers.

    Timeline

    Past activity

    Project background

    In 2022, we adopted a new transmission pricing methodology (TPM) into the Code. This was a significant process which involved crucial input from key stakeholders, industry participants, Transpower and the Commerce Commission. The new TPM ensures that transmission pricing is fit for purpose in the transition to a low-emissions economy and that the grid is paid for by those who are expected to benefit from investment in it.

    The new TPM will encourage more efficient use of the grid, and more efficient investment in transmission and generation assets. It will:

    • reduce the cost of electricity at peak times when New Zealanders want to use it most
    • ensure that those who set to benefit from areas of grid investment will pay for it
    • lead to lower prices in the long-term for delivered electricity.

    Our analysis suggests a central estimate of net benefit to New Zealanders of the new TPM of approximately $1.8 billion over the next 28 years.

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