Wellington Electricity planning to spend more than $30m improving electricity resilience

  • Wellington Electricity planning
  • 03/11/2017
Wellington Electricity planning to spend more than $30m improving electricity resilience
Households in Wellington, the Hutt Valley and Porirua would faceincreased power bills under a lines company planto spend tens of millions of dollars to prepare the network for earthquakes.

In the coming days, Wellington Electricitywill announce proposalsto spend about $30 million to $35m on readying the network for a major earthquake or other disaster.

The Hong Kong-ownedcompany owns the electricity lines that supply morethan160,000 homes.

Spending will include strengthening existing substations, buying mobile substations, and increasing spare equipment held for repairs, to cover the eventuality that supplies to the region are cut off.

READ MORE:Faultlines: How Wellington's power and water supply is vulnerable in a major earthquake

But if it is approved by the Commerce Commission,the investment would be paid for through higher electricity bills, with the lines charge component likely to go up by the equivalent of about $15 a year.

Other resilience-related increases topower bills could follow in the coming years. The spending plans are understood not toinclude the cost of a backup for the Central Park substation in Brooklyn, the single point of entry for much of Wellington city.

Should the Brooklyn substation be knocked out, almost all of Wellington'scentral business district, as well as the eastern and southern suburbs, could face up to four weeks with no power. The cost of fixing that issue has been put at closer to $15 a month per household.

Since the Kaikoura earthquakes last November, the potential weaknesses of some of Wellington's critical infrastructure, such as electricity and water supplies, has come under greater scrutiny.

Typically, lines companies' investment plans are set out in a five-yearly price determination process with the Commerce Commission. However, WEL is applying for permission to fast-track the process for extra spending.

Shortly before the election, then-commerce minister JacquiDean directed the competitionwatchdog to give "due consideration" to spending on resilience projects that were "not anticipated" the last time WEL'sspending plans were reviewed.

How much lines companies are allowed to charge users is related to how much they invest, creating an incentive to "gold-plate" networks, spending as much as allowed by regulators, to maximise profits.

The new Labour-led Government could intervene to frustratethe process. However, Labour-aligned WellingtonMayor Justin Lester has confirmed Wellington City Council has committed to supporting the plan.

Lester saidconsistency of supply was a necessary requirement, and he believed Wellingtonians would understand a price increase.

"They will want the system to be as reliant and resilient as possible.Thecity needs this.

"We accept there's a price and quality trade-off,and that's acceptable given the circumstances."

WellingtonCityCouncil resilience officer MikeMendoncasaid thecouncil was pleased the linescompany was making progress to improve resilience.

Wellington Electricitychief executive Greg Skelton has refused to give any detail on the spending plans, for fear of alienating regulators or the new Government.
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