SIR COLIN MAIDEN, Transpower chairman from 1997-2004 puts his own perspective on a period when the country was taking a new direction with the national grid.
THE MARCH/APRIL ISSUE of EnergyNZ published an article by Brian Leyland entitled Transmission- an expensive option. This article contains a number of misleading statements.
The chapter on Transpower in my biography An Energetic Life (Dunmore Press 2008) provides a more complete and accurate account of events at Transpower in the late 1990’s and early 2000’s.
ln his article Brian Leyland states that, “Bob Thomson was able to persuade his board that there was no need to invest by expanding the transmission system”. This is not true and I quote from my book:
“Also in 1999 Transpower published its first annual Asset Management Plan, which provided information on transmission assets over the coming 10 year period.”
The following year the System Security Forecast was released as a companion publication to the Asset Management Plan. At this time there was a difference of opinion between some members of the board and Bob Thomson – to the extent that significant new investment in transmission would be required in the future.
However, there was no disagreement concerning Transpower’s objective to load the grid as much as possible by working it harder through such means as tactical upgrades. But it was recognised that grid assets were ageing, with the 220KV system dating back to the 1950s, and there were limits to the extent to which the grid could be upgraded.
Bob Thomson argued strongly that, in the future, new technology small-scale generation would be a viable alternative to new investment in transmission and distribution.
He postulated that over the next five to 10 years, the electricity industry would undergo a technology change similar to that which had occurred in the personal computer and telecommunication industries.
In general the board was not convinced by this argument. In particular, I was sceptical about the potential use of fuel cells for small scale generation. This was because I was familiar with fuel cell developments back in my days at General Motors in the 1960s and their economic viability was always ‘just around the corner’.
A specific requirement from the Asset Management Plan was the need by 2006-7 to reinforce the grid in the Auckland region, particularly to the North Shore to handle the predicted growth in demand.
Transpower, after some pressure from the board, joined with Vector and United Networks Ltd to develop the Power Links project to address this issue.
The medium to long-term solution was, at the time, to take 220KV cables through Vector’s Tunnel, from Wiri to Hobson Street, in cable trenches beneath Fanshawe Street, past the Westhaven marina, underneath the Harbour Bridge, and in cable trenches up the new bus lane on the northern motorway.
Good progress had already been made in securing the necessary property rights and resource consents for this project and both the cable trenches around Franshawe Street to the Harbour Bridge and up the Northern motorway had been completed by the time I retired from the board in 2004.
Thus the board of Transpower did have a difference of opinion with Bob Thomson about the future of the grid.
However, there was agreement about the need for the now-called ‘North Auckland and Northland project’, which made good progress under Bob’s leadership, and this should be recognised in future debates and perspectives on this game-changing period in our generation history.
It is true that, at this time, management was not bringing other major transmission projects to the board for approval.
But this was understandable for the following reasons.
The performance of the grid was improving.
Despite some parts of the grid being aged, sufficient money and effort had gone into maintenance, as evidenced by the fact that unplanned outages had dropped from around 20 system minutes in 1993/94 to less than four system minutes in 2003/04.
Transpower had a deliberate policy of working the grid harder and harder throughout this period.
The board of Transpower has the responsibility to operate the company as a successful business and no successful company invests too far in advance of necessity.
After working for General Motors in the USA, I had strong views about holding costs down by getting the best out of capital equipment.
It should be noted that average transmission costs dropped from 1.8 cents per kilowatt hour in 1993/04 to 1.1 cents per kwh in 2003/04.
This represented a fall in the transmission costs of a typical consumer’s electricity bill from above 10 percent to eight percent.
Under the self-regulatory regime in the electricity market at the time, it would have been very difficult, if not impossible, for Transpower to persuade it’s customers to pay for new major transmission projects.
It took later changes in the regulatory system, involving the Commerce Commission and the formation of the Electricity Commission, to overcome this problem.
Lastly in 2003/4 Brian Leyland let his strong views concerning transmission upgrade options be known to Transpower.
And, at the time, his options were considered by Ralph Craven, Bob Thomson’s successor, his team and consultants.
They concluded that a new line from Whakamaru to Auckland was the preferred way to get more power into Auckland. And the rest is history.