The Electricity Authority has indicated it wants feedback on a proposal to rein in excessively high connection costs which were a known problem in some parts of the country.
Electricity Authority networks and system change general manager Tim Sparks said high costs to connect to networks could have an impact on new housing and commercial developments, EV charging stations and other critical infrastructure.
“Reducing very high up-front charges would help enable and encourage efficient development. Not only is this good for the economy, it means the network costs would be shared among more people on the network,” he said
“We think people should pay all their costs for connecting to networks over time, as well as their share of other network costs. However, data indicates a small number of lines companies have been requiring newly connecting customers to pay more than their share.
“The proposal is targeted so we would intervene only where it’s needed. Most of the 29 lines companies – and their customers – wouldn’t be affected.”
He admitted the proposal could mean the few lines companies that would be affected would respond by increasing their lines charges for existing customers on their network.
But he expected the increase would be very small. He said in Auckland it was estimated existing households could initially face an increase of between 22c and 66c a month.
There were two related issues where the authority believed existing regulation could be improved.
At present, regulations do not limit up-front costs for some parties wanting to connect to the distribution network or upgrade an existing connection.
Excessive up-front costs could deter business growth, new infrastructure, housing development and electrification in general.
Regulatory arrangements are unclear about distributors’ rights to refuse to provide or maintain connections, creating inconsistency or uncertainty for those wanting to connect.
Aurora Energy customer and commercial services general manager Mark Pratt said the company had a capital contributions policy which set out how the costs of establishing new connections and upgrading current connections were determined.
“Every customer’s situation is unique, so connection costs are tailored to reflect individual requirements such as distance from existing infrastructure and expected electricity use. Our policy ensures costs are fair and equitable for both existing and new customers,” he said.
Mr Pratt said the most recent distribution pricing scorecard from the Electricity Authority, in 2023, ranked Aurora Energy second out of 29 lines companies and rated the company 4.5 out of 5, saying “the authority is pleased with the ongoing advancements regarding the new capital contribution policy”.
The company was committed to supporting new connections, which it saw as a positive reflection of the region’s growth. It has not turned down any requests to connect to its network.
A PowerNet spokesperson said all new connections had a connection fee to cover processing the application.
There might also be charges if significant work was required to provide the power connection, such as a new piece of line along the road. Customers were given a quote for any charges over the connection fee before any work began.
The connection fee was a set amount. The charge for line work was calculated on a case-by-case basis.
“PowerNet’s connection fees are favourable when compared to several of the electricity distribution businesses in New Zealand,” the spokesperson said.
