06 December 2016

Electricity Authority decisions demonstrate High Court reasoning was incorrect

The Electricity Authority (EA) has been consulting on changes to electricity transmission pricing, removing the pricing principles under which distributed generation connects to the distribution network, and removing the avoided cost of transmission payments received by many distributed generators. No owners of distributed generation accepted the EA’s proposals regarding distributed generation, and the transmission pricing proposals received widespread condemnation from across the industry (accept from certain major industrial customers, who were set to benefit significantly because the Authority chose measures of “use” that would significantly favour those entities).

To everyone participating in the consultation process on the EA’s proposals it was evident that the EA had a pre-determined position. Consultation papers used terms like “subsidy” and “cross-subsidy” in a perjorative and political manner, using measures of “fairness” based on the EA’s heavily flawed analysis. Unfavourable responses to consultation were met by the Authority trying again, from a different angle, or by trying to slice off a smaller sliver of an issue that it might be able to win in isolation. The consultation process has been long, complicated, expensive for industry participants, and seemingly designed to wear everyone down.

Trustpower took exception to the EA’s pre-determined position, and filed an application for a Judicial Review in the High Court. On Friday 2 December 2016 the Court declined Trustpower’s application[1], with the decision being made public on Monday 5 December.

In reaching his decision, Cull J stated:
The stage that has been reached in the process is that the [EA] has not made a final decision on the submissions it has received, but is still in the process of considering them.[2]

Judge Cull went on to state:
It is also inappropriate for this Court to undertake a merits-based review of the [EA]'s consultation process, when the [EA] is currently undertaking an analysis of all the submissions... both as to substance and as to process, and has yet to reach a decision.[3]

The EA gave the lie to the Judge Cull’s reasoning the very next day, announcing two decisions[4] that had quite clearly already been made:
  • First, the EA has decided not to progress the removal of the distributed generation pricing principles, a decision that was forced upon it given widespread condemnation of its proposals.[5]
  • Second, the EA has decided to progress the removal of ACOT payments.
The decision to remove ACOT is hardly a surprise, being a decision that the EA made clear when it first consulted on ACOT back in 2013.[6] The decision was pre-determined and the EA was not going to let any amount of analysis stand in its way.

[1] Trustpower v Electricity Authority [2016] NZHC 2914. Available on the Electricity Authority website at http://www.ea.govt.nz/dmsdocument/21511.
[2] At 116(b).
[3] At 122.
[4] Electricity Authority, "Authority Decision on the review of DGPPs and ACOT", 6 December 2016. Available from this link.
[5] See the summary of submissions published by the EA.
[6] For more on the original consultation, see ASEC Report finds Benefits from Distributed Generation and ACOT Payments, 9 February 2014.