AWARDS FINALIST: Top Energy – affordable electricity

In 2017, Top Energy set a goal to reduce its distribution lines charges from the upper quartile for cost per connection to the lower quartile by 2030. The firm recognised that many in the Far North, an economically challenged region, still struggle to meet basic needs, with electricity being one of their greatest expenses. This target was achieved in 2023.

Ngawha

The firm’s Ngawha geothermal plant was generating about 70 per cent of the region’s electricity needs. The Far North relied on electricity imported from the Waikato through Auckland.

With increasing transmission and distribution lines charges, it was becoming difficult for consumers to afford the service, and interruptions of supply were impacting consumers in the region. Top Energy’s cost of delivering electricity was the third highest in New Zealand, following a 10-year period of investment in an ageing distribution network.

The Ngawha geothermal field was identified as having additional resource to be tapped. The option to expand the operation presented Top Energy with an opportunity to reduce the company’s distribution network lines charges to zero over time. To manage expectations with consumers, a strategic target of reducing lines charges to the lowest quartile by 2030 was adopted.

Investment in the expansion of the Ngawha power station was identified as a strategic initiative that could provide new cashflows to achieve this goal, as well as protect consumers from ongoing transmission price increases and load shedding or control instructed by the system operator.

With an additional power station (OEC4), Ngawha could supply 125 per cent of the region’s power, enabling energy exports south to generate additional cashflows. It would also protect consumers from fluctuations in the market, transmission price increases and supply issues.

Benefits

Supplying Far North consumers from Ngawha reduced the consumers' transmission costs by $4.7 million in 2022.

When Transpower instructed Top Energy to shed load during the national power shortages in 2022, the company was able to increase generation to assist in maintaining the integrity of the national grid, as well as maintaining continuity of supply for Far North consumers.

Through consumer discount payments, total distributions have increased 25 per cent, or $50 per consumer. Another $50 per customer increase is planned in 2024, and every three years thereafter. In 2023, lines tariffs – excluding increases from the new Transmission Pricing Methodology – moved Top Energy’s income per customer connection to the lowest quartile, achieving the strategic goal seven years ahead of plan.

Since commissioning OEC4, Top has achieved year-on-year cuts to distribution charges to deliver a total reduction of 23 per cent. The latest reduction means consumers won’t bear the full impact from the 205 per cent increase in transmission charges since April 2023 with total lines costs not increasing this year.

The Outcomes Awards is sponsored by the Electricity Authority.