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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

    In October 2022, we consulted on amendments to the transmission pricing methodology (TPM) to address some technical issues identified by stakeholders. We subsequently decided to amend Part 12 of the Code to correct typographical errors in the TPM, formulae for rebate calculations, omissions and further clarifications. Read our decision paper.

    In 2023, we consulted on minor amendments to improve issues identified in the new TPM. Following this consultation, we decided to amend Part 12 of the Code to correct 9 of the 10 issues. Read our decision paper.

    We sought further industry feedback on issue 5: Allow Transpower more flexibility in the calculation of regional Net Private Benefit (NPB) under the price-quantity method for BBC allocation. View submissions.

    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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