From the CEO: Changing a “fact of life”

I cringe when I hear people describe power outages as “part of life in the Far North”. Because it’s one of the aspects of life up here that we at Top Energy have been working solidly to change since we put into place our TE2020 network investment programme back in 2009.

Last week’s three-hour, region-wide outage was unacceptable. It’s likely that the fault was caused by a damaged insulator in the Kaikohe substation. 32,000 households and businesses were massively inconvenienced by the black-out and I apologise unreservedly.

With the memory of last week’s outage still fresh in everyone’s memory it may seem a little difficult to believe but we are in a much better place than we were in 2009. When the exceptional impact of the storms in April and July last year are stripped out of the annual figures, power outages in the Far North have reduced from more than 900 minutes (15 hours) a year per customer in 2009 to just 255 minutes (4.25 hours) a year in the 2014/2015 financial year.

This has only been made possible by investment and modernisation. There is no denying it; the Far North has an aging network which continues to suffer from a lack of investment in years gone by. However, since 2009 we have been upgrading and refurbishing it as quickly as we possibly can. The challenge we face is to keep getting those reliability numbers up while keeping a cap on costs and prices to the consumers who own us.

Construction of the first two stages of the new ‘East Coast’ 110kV supply line from Kaikohe to Kaitaia, between Kaikohe and Wiroa, were completed and commissioned last year as planned. The project is scheduled for completion in 2026 and will provide Kaitaia and the very Far North with a second source of electricity supply, reducing its dependence on the current aging and vulnerable single high-voltage transmission line from Kaikohe. 2026 is a long time away and in the meantime we are looking at solutions in the short term, similar to the generators at Taipa which kept the power there on last Friday.

We’re making steady progress with plans to extend the Ngawha geothermal power station’s current generating capacity. This will take the facility’s output to 75MW. Peak demand on the Top Energy network is roughly 70MW so an expanded Ngawha should be able to supply the entire demand of the Mid and Far North, reducing our dependence on the single link to the national grid.

Other work we have done to improve the availability and security of the region’s electricity supply includes the construction of new sub stations and of supply ‘loops’ all around the region, from Kaitaia to Kerikeri. The loop concept is simple. If you cut a straight line it isolates the entire line from the break onwards. But if your line is a loop you can change power flows to ensure that as few people as possible are affected by any line break.

It’s having an impact. During the huge storms of July last year the southern part of our network, where the modernisation work is nearing completion, lost just 25 percent of supply. In the north, where work is less advanced, we lost 75 percent of supply.

All this comes at a price. We have spent $160 million on network upgrade and expansion so far and we are looking at an eventual price-tag of more than $260 million. Compare this to the network’s total value of $140 million when the programme started and you’ll understand how, essentially, we are in the process of building a whole new network.

We have been given permission by our regulator to increase our prices to pay for this work but our aim is to keep our price increases as close to the rate of inflation as possible. We’re very aware that the central government subsidies that initially funded the network are gone and so now our customers have to pay for this work as part of their monthly power bill.

Our capital investment in the network replacement and reinforcement, as a proportion of the asset value, outstrips any other network in New Zealand. Put simply, we’re spending more on maintaining and replacing our network than anyone else, compared to how much it is worth.

This will continue for as long as it takes for us to say with confidence that we’re as reliable as any other similar network in the country. You have my assurance of that.

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