About this page
This page provides information on the calculation of indicative connection charges, benefit-based charges and residual charges under the Electricity Authority’s (Authority’s) Transmission Pricing Methodology (TPM).
The information on this page relates to pricing year 1 April 2024 - 31 March 2025 (PY2024/25) only. You can use this information to calculate what your indicative charges would be if you were to connect to the grid during PY2024/25. We will update this page annually during April, to provide information for the new pricing year. To understand how your transmission charges might change in future years, please refer to Our proposed five-year workplan.
The information on this page is indicative only. Please note the disclaimers at the end of this page.
If you require help from Transpower to calculate indicative transmission charges, then please contact our Customer & Commercial team. Our ability to provide this information depends on the stage of your project.
Indicative charges
When you connect to the grid, you will be required to pay transmission charges. The TPM specifies how Transpower must calculate transmission charges.
This table below illustrates the three main components that make up transmission charges under the TPM and the customers to whom those components apply:
The three main components that make up transmission charges are:
Connection charges
Benefit-based charges
Residual charges
Connection charges
Connection assets are grid assets that exist specifically to connect a customer to the grid, even if the customer’s assets are not directly physically connected to those assets.
The costs of a connection asset are recovered from the customers connected to it through connection charges. If there are multiple connected customers, then the costs and charges are shared between them, and the connection asset is referred to as a shared connection asset.
See our connection charges information sheet for further information.
If your connection to the grid will be through new grid assets that are built for your connection, then you will be required to enter into a Transpower Works Agreement (TWA). See Connect to the Grid, for information on our connection process.
Under a TWA, you will pay the capital cost of the connection assets through TWA charges. As the capital costs are paid under a TWA, you will only pay the operating and maintenance components of connection charges under the TPM, until the assets reach end of life and are replaced without a subsequent TWA. Our current connection charge rates can be found in our transmission rates table, and the asset replacement costs in our building block worksheet.
We’ve included an example below to illustrate how to calculate your new connection charges.
- Example
A new customer requests to connect at a new connection location.
To enable the new customer’s connection, a substation, two new transformers, six feeders and related equipment (circuit breakers, links, busses with zone protection and revenue meters) are funded by the customer under a TWA. The capital costs of the new connection assets are recovered through TWA charges, and the operational and maintenance expenses are recovered through TPM connection charges.
The configuration is illustrated in the connection location asset diagram here and the connection charge calculation is illustrated in the table below:
Image
The following table provides a breakdown of the connection charge components by asset & total connection charge for this example:
*Where the capital cost of a connection asset is recovered through an investment agreement (TWA), the asset’s replacement cost is deemed to be zero and therefore its asset component is zero as well. This ensures Transpower does not double-recover the return of and on its investment in the asset. See our ‘FMD type 1’ and ‘FMD type 2’ info sheets for further information.
Connection Charge Components
Asset Component ($0)
- What is this?
The asset component of the connection charge (TPM clause 26) provides Transpower with a return of and on its capital investment in connection assets.
It's made up of two components:
- Asset Component Calculation: The asset component is determined by multiplying the Asset Return Rate (ARR) by the replacement cost of the connection asset.
- Investment Agreement Exception: If the capital cost of a connection asset is recovered through an investment agreement, the replacement cost of the asset is considered to be zero. Therefore, the asset component is also zero, ensuring Transpower does not double recover the return of and on its investment in the asset.
- Calculation
4.26% x $0 (asset return rate x asset value)
Maintenance Component ($206,002.54)
- What is this?
The maintenance component of the connection charge (TPM clause 30) recovers Transpower’s total maintenance costs for all connection assets, less any contribution to those costs paid under an investment agreement.
In this example, no maintenance costs have been paid under the investment agreement. This means that we need to determine the asset value for each connection asset, and multiply this by the maintenance recovery rate, to determine this component of the charge.
- Calculation
Determined as the product of the maintenance recovery rate and the asset value. The Maintenance recovery rate is 1.15% for substation assets and on a $/km rate for line assets and can be found in the transmission pricing rates table.
Asset value (see calculations below) x maintenance recovery rate (1.15%)
Asset Value Calculations
- Substation $3,042,557.61
Building Value + Land Value + Establishment Value + Oil Containment Value
Building Value = $428,416.72
= $400,779 x 1.048 x 1.02 (Building Block (RURAL_OD) x Interest During Construction x Seismic Factor)
Land Value = $450,000.00 (Actual Value)
Establishment Value = $1,871,154.93
= $1,566,187 x 1.048 x 1.14 (Building Block (RURAL) x Interest During Construction x Seismic Factor)
Oil Containment Value = $292,985.96
= $245,234 x 1.048 x 1.14 (Building Block (OIL_60_CU_M) x Interest During Construction x Seismic factor)
Asset Component: is recovered through an investment agreement (TWA)
- Transformer (T1) $4,379,471.86
$4,018,158.53 x 1.048 x 1.04 (Building Block (S_220/33KV_120MVA_3PH_TV0_D_S_OLTC_NER_33KV) x Interest During Construction x Seismic factor)
Asset Component: is recovered through an investment agreement (TWA)
- Switch (H72-2182) $127,831.66
$119,585.07 x 1.048 x 1.02 (Building Block (H72) x Interest During Construction x Seismic factor)
Asset Component: is recovered through an investment agreement (TWA)
- Revenue Meter (RM2162) $47,115.48
$44,076 x 1.048 x 1.02 (Building Block (P8A) x Interest During Construction x Seismic factor)
Asset Component: is recovered through an investment agreement (TWA)
- Link (Link 1) $464,091.01
0.856 kms x $521,310 x 1.04 (Line Length x Building Block (220KV_SCST_640A_1/GOAT_50C) x Seismic factor)
Asset Component: is recovered through an investment agreement (TWA).
Operating Component ($22,355)
- What is this?
The operating component of the connection charge (TPM clause 31) recovers a portion of Transpower’s total operating costs for all alternative current (AC) assets (grid assets other than HVDC assets, which includes all connection assets), less any contribution to those costs paid under an investment agreement.
Operating costs are allocated to connection assets based on the number of AC switches comprised in them.
In this example, no operating costs have been paid under the investment agreement.
- Calculation
Operating costs are allocated to connection assets based on the number of AC switches comprised in them. This figure is calculated by multiplying the number of switches by the operating cost of each switch (the operating recovery rate), which is $1,315 and can be found in the transmission pricing rates table.
17 x $1,315 (AC switches x operating recovery rate)
The sum of connection charge components is the total connection charge for a connection location
- Annual connection charge ($228,357.54)
(Asset component + Maintenance component + Operating component) x Customer Allocation
($0 + $206,002.54 + $22,355) x 100%
The example above assumes there is no funded asset component or funded asset rebate for the customer. See our ‘FMD type 1’ information sheet for information about the funded asset components of connection charges.
Want to learn more about connection charges? Read our information sheet.
Benefit-based charges
Benefit-based charges (BBCs), for new and some historic interconnection investments, are paid by the customers who are expected to benefit from them. These investments are called benefit-based investments (BBIs).
BBIs include new interconnection assets, investments in the replacement and refurbishment of existing interconnection assets, and transmission alternatives that avoid or defer the need to invest in interconnection assets.
There are three broad categories of BBI:
- Appendix A BBIs (the seven historic interconnection investments specified in Appendix A of the TPM);
- Low-value post-2019 BBIs (post July-2019 interconnection investments of $20m* or less) – referred to on this page as simple method BBIs; and
- High-value post-2019 BBIs (post July-2019 interconnection investments over $20m*) – referred to on this page as standard method BBIs.
*Note this threshold will increase to $30m from 1 April 2025.
See our Benefit-based charges information sheet for further information. Below is a map setting out BBC rates ($ per MWh) for offtake and injection at each substation in NZ. The rates are blended rates for Appendix A, simple method and standard method BBIs. The minimum and maximum values relate to the lowest and highest paying customers in that region.
To use this map, you will need to determine the substation you will be connecting to. For new connection locations, you should select the electrically closest substation. Please note that this is not necessarily the geographically closest one.
If your plant is a battery, you should use the injection rates only.
You will also need to estimate how much electricity per year you will be taking off or injecting into the grid, or other network/plant you intend to connect to, when your plant is fully operational (i.e. the MWh input to the calculation).
We’ve included an example underneath the map, to illustrate how to calculate indicative BBCs.
Map of Benefit-Based Charges*
*some regions did not have any injection customers at the start of the simple method period, which is why there is no allocation for those regions. Injection customers are typically generators, but it is possible a local network with substantial embedded generation will also be an injection customer in some locations. Generators can also be offtake customers for some periods when they are not generating.
- Example
Customer A (a generator) in Connection Region CSI_HV has expected annual offtake of 50 MWh and expected annual injection of 1,500,000 MWh when fully operational. Customer A's indicative charges for PY2024/25 would be calculated using the table above as follows:
• The annual indicative BBCs for offtake would be between $123 (50MWh x $2.4578) and $144 (50MWh x $2.8841)
• The annual indicative BBCs for injection would be between $4,995,750 (1,500,000MWh x $3.3305) and $7,654,050 (1,500,000MWh x $5.1027)
• The total annual indicative BBCs would be between $4,995,873 ($4,995,750 + $123) and $7,654,194 ($7,654,050 + $144)
Residual Charges
Residual charges recover the remainder of Transpower’s maximum allowable revenue (as set by the Commerce Commission) not recovered through other transmission charges, including connection charges and benefit-based charges.
Residual charges are allocated according to each customer’s gross load, aggregated for all locations where the customer is connected to the grid. Load supplied both from the grid and from embedded generation is used to calculate gross load.
For new connections, the residual charge starts from the beginning of the 5th pricing year after the connection date and ramps up over the next three pricing years. You will need the following information to estimate your indicative residual charge:
- Expected peak gross load of the new connection in kW, when fully operational (excluding charging and discharging from batteries apart from losses)
- The residual charge rate for PY2024/25, being $54.54 per kW of peak gross load. Note that the rates will be different for later pricing years, but those rates are not known yet.
- Example
-
Image
Please note this example does not take into account the impact of annual gross energy consumption changes for the connecting party or other customers, which will affect the allocation over time. For a more detailed explanation of residual charge calculations, please refer to the residual charge information sheet and the TPM.
*Disclaimers
The indicative pricing information on this page is an estimate based on the TPM applied to the pricing year commencing 1 April 2024 (PY2024/25). We cannot forecast how TPM charges will change over time because the inputs to their calculation will change in ways, and at times, we cannot predict precisely or at all. As such, indicative charges are only a snapshot at a single point in time of what transmission charges would be expected to be.
Nothing on this page is a formal calculation of charges for any pricing year. Actual charges will be different to the indicative charges.
Transpower specifically disclaims and has no liability to you or any other person for the accuracy or completeness of the indicative charge information on this page, or otherwise provided by Transpower, or for your reliance on that information. Reliance on indicative charges is at your or their own risk.
We recommend you:
(a) consult the TPM and any records of relevant input information you may have access to, and
(b) seek independent expert advice before making any decision based on indicative charges.