13 Nov 2025
Transpower has today announced it will undertake an operational review of the Transmission Pricing Methodology (TPM), aiming to enhance transparency and future-proof transmission prices as Aotearoa New Zealand transitions to an increasingly electrified future.
Executive General Manager Strategy, Regulation and Governance David Knight says the review is an opportunity to ensure the TPM continues to deliver on its intended objectives and will help transmission network customers in navigating the complexities of transmission charges. The review is supported by the Electricity Authority (the Authority), which approves the TPM to determine how Transpower recovers the annual cost of running the national transmission grid from transmission customers.
“Since our implementation of the new TPM in 2023, we’ve been considering feedback from stakeholders about aspects that could be improved to reduce uncertainty and volatility for existing customers and for potential new customers looking to invest in New Zealand. We engaged Concept Consulting earlier this year to understand whether the TPM is delivering on intended outcomes and identify issues and how these might be addressed. That review concluded that a focused operational review would be the most effective approach to address complexity and uncertainty issues in the TPM. We have spoken with the Authority, and we know it welcomes the opportunity Transpower is taking to complete this review and propose potential changes.
“This review will focus on near-term improvements to make the TPM simpler and more predictable for transmission network customers. We will aim to reduce volatility by streamlining adjustment events and simplify benefit-based charges through less complex modelling, as well as explore ways to improve regionalised charging to balance benefit specificity and simplicity.”
The Commerce Commission sets the total revenue that Transpower can recover each year, and Transpower recovers this through transmission charges payable by anyone directly connected to the national grid – generators, distributors (local lines companies) and some large industrial consumers.
The Authority’s current TPM determines how this revenue is allocated to transmission customers using a benefits-based approach, where those expected to benefit most from current and future grid investments contribute accordingly. Transpower’s review will address how benefit-based charges and other key features of the TPM are working and may propose changes considering the impact on end consumers. Proposals will then be considered by the Authority which will decide whether to amend the TPM. At present, approximately 8% of an average consumer’s power bill comes from transmission charges.
In addition to engaging with stakeholders on developing proposed improvements, Transpower will set up an industry working group to support the operational review and ensure a dedicated voice from the sector is an integral part of the process.
“We are committed to ensuring our transmission pricing remains fair, transparent and fit for purpose. Together with the Authority, we are having conversations across the industry on how best we can work together to expedite improvements that address complexity and broader policy issues, ensuring the TPM is an enabler for New Zealand and achieving its intended outcomes,” Mr Knight concluded.
ENDS
Background
The Authority’s transmission pricing methodology determines how Transpower recovers the annual cost of running the national transmission grid from transmission customers.
The current TPM has applied since 1 April 2023.
Under the TPM, transmission charges are allocated to Transpower's customers via a benefit-based system. In a benefit-based system, those that are expected to benefit most from the current and future investment pay the costs. The TPM has been designed to reflect the costs and expected benefits of electricity transported across Transpower's 12,000 kilometres of transmission lines.
Transpower’s role is to implement the TPM, and there is information about this on our website. The TPM is available on the Authority's website. The information about the operational review is here.
For more information
Call Transpower’s media phone 021 195 8613 or email [email protected]