In response to the Electricity Authority submissions of the current Transmission Pricing Methodology, Mayor of Invercargill Tim Shadbolt has joined his fellow Southern mayors in seeking a reduction in electricity transmission pricing for Southern businesses and consumers.

Mayor Shadbolt said “I love Auckland, I have three sons and seven grandchildren living there and I want them to have a happy, secure life in ‘New Zealand’s Super City’. Unfortunately, the rampant growth of Auckland and rapid expansion of the urban foot-print is making living in Auckland and home ownership almost impossible for young families, in spite of the fact that a disproportionately large amount of this investment is being funded by the rest of New Zealand. The subsidisation of transmission costs in the North is adding to the costs to Southern consumers and businesses and further undermining industrial growth in the Southern regions. This is partly due to high transmission costs” he said.

“Since 2004 $1.3 billion has been spent to upgrade the grid to keep the lights on in Auckland. The lower North Island and the South Island is now paying around $114 million a year for this investment, yet getting no benefit from it”.

“All we want is a fair deal; having the rest of New Zealand propping up the all-consuming Auckland infrastructure – spend is simply not sustainable. The South just can’t keep shouldering the heavy costs of grid infrastructure located thousands of kilometres away – people should pay for what they use”, says Mayor Shadbolt.

“Of course, we are prepared to pay our fair share but Southland alone is contributing over $60 million a year towards electricity transmission and roading costs for which is does not receive any benefit. The burden of these costs as well as the costs of the Cook Strait cable; which are borne by Southern electricity generators, is undermining industry and energy generation investment in the South Island. This is happening at a time when New Zealand needs to develop new cost-competitive value-adding industries in the regions to drive greater export value from our primary sector” he said. “We have the infrastructure, the land and the knowhow and the ability to accommodate an increased population and are ‘open for business’ but current policy seems to be out of step with the Governments own Growth Agenda”.

The economic effects are even worse when you consider that there are no viable energy alternatives available in South Island for example reticulated natural gas and in some cases geothermal steam. As a consequence there is greater reliance on electricity as the primary source of energy and heating.

Mayor Shadbolt thought that “this would be one of the very rare occasions in his life that Wellington would agree with the Southern views simply because they too are paying over the odds to fund the growth juggernaut in the North”.

In the South consumers pay 23 cents per litre more for diesel than consumers in Auckland do, reflecting the cost of transporting the fuel from the distribution point to the consumption point.

“The transmission of electricity should follow the same rules” he said. This issue has been the focus of regulatory reform for over eight years. It’s now time for the Electricity Authority to take action to correct this wrong.”