The Commerce Commission says the impacts on households and business customers from electricity outages following Cyclone Gabrielle highlight the need for a 'new normal' in asset management planning and investment strategies.
Commissioner, Vhari McWha, says such recent extreme weather events have served to reinforce the important of resilience planning to ensure appropriate investment or mitigation that benefits electricity consumers – while keeping costs reasonable.
In approving an application from national electricity grid operator, Transpower, to exclude the electricity interruptions and outages caused by Cyclone Gabrielle in February 2023 from its annual performance quality measures, Ms McWha says "network resilience is more important than ever given the expected increased likelihood and severity of extreme weather events".
Ms McWha says Transpower and the 29 local electricity lines companies that the Commission monitors "need to ensure their future plans give the right consideration to the impacts of climate change and network resilience."
"Resilience has never been more important, given that New Zealand is becoming more and more reliant on our renewable energy to power our lives and livelihoods," she says.
"Our review around these outages on the Grid has found that Transpower demonstrated good industry practice – and shouldn't be penalised for these interruptions and outages that were beyond its reasonable control, but we can't ignore the timely reminder from this weather event that left thousands of Kiwi families and businesses without power for an extended period of time.
"Planning for severe weather events should now be front of mind in every part of the electricity networks and supply chain that we rely on every day."
The Commission requires Transpower to meet certain service standards (including for reliability of service) that consumers should expect. However, the regulatory regime under Part 4 of the Commerce Act allows the Commission to remove the impact of events that it judges to be outside the Grid operator's reasonable control, such as natural disasters.
Ms McWha says: "We looked carefully at whether the circumstances and impacts experienced during Cyclone Gabrielle met the threshold and whether they could have been reasonably planned for, prevented or mitigated."
With the increasing reliance on electricity and the importance of this to Net Zero ambitions, Ms McWha says a key focus area in the Commission's upcoming review of Transpower's forecast expenditure for 2025-2030 will be how it is identifying network risks and cost-efficient mitigations."We expect Transpower to look hard at resilience planning and its needs now and into the future and put forward a well-justified proposal for us to assess. And this applies more broadly across all the lines companies, which are equally important to keeping the power on for New Zealanders."
