24 Apr 2015

Transpower moves to recover cost overruns

1:16 pm on 24 April 2015

National grid operator Transpower has won preliminary approval to recover cost overruns for one of its biggest grid upgrades.

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Photo: RNZ / Diego Opatowski

The project is the 186 kilometre line from Whakamaru in south Waikato into South Auckland.

It caused intense controversy at the time but Transpower said it was needed to get adequate electricity into Auckland.

It was supposed to cost $824 million but ended up costing $70 million more.

Transpower then went to the Commerce Commission, which issued a draft ruling, allowing Transpower to recover $52.3 million of the overspend.

It said that cost overrun was understandable in a huge project, but $17.7 million of it came from construction work being done out of sequence, and Transpower should have to wear that cost.

Allowing Transpower to recover $52.3 million would not hit consumers hard, adding just 89 cents a year to an average bill. But that figure would be higher for major users such as dairy companies or Auckland Airport.