Review finds August power cuts ‘need not have happened’, blaming the EA and Transpower

A review into why tens of thousands of households faced power cuts on the coldest night of the year found it only happened because Transpower did not understand how much demand was happy to be shut down.

The MBIE commissioned review also blamed the “shambolic” state of some of Transpower’s systems on the Electricity Authority, recommending it get advice on how to hold the system operator to the rules of the electricity market.

On August 9 around 34,000 households had their power turned off, after Transpower instructed local lines companies to shed load to prevent wider outages.

Initially, attention focused on record electricity demand and the behaviour of generators, with thermal power stations operated by Contact and Genesis not running on the evening in question.

Energy Minister Megan Woods initially claimed “commercial decisions” were behind the problem.

But a review by former Labour MP Pete Hodgson and technical adviser Erik Westergaard concluded that irrespective of the demand and availability of generation, there was no need for the cuts to happen at all.

“Forced disconnection of household electricity was entirely avoidable,” the report said.

Hodgson and Westergaard found that there was enough “discretionary load” – effectively users prepared to turn off if the system needed it – to cope in the circumstances, but Transpower did not understand what it had at its disposal.

“Turning off any householder’s electricity, apart from their hot water cylinder, simply need not have happened.”

The report found that to understand how much discretionary load was available, Transpower had to – and did – call around the country’s lines companies to ask them.

“They [Transpower] were managing a system they couldn’t fully see. This strikes us as extraordinary.”

When Transpower issued a demand allocation notice – which the report said did not need to happen – that notice was “remarkably faulty”, creating confusion and requiring load to be shed “illogically”.

Despite this, Transpower staff “acted capably and professionally during a challenging evening” and their commitment prevented much wider power outages.

After the power cuts, Electric Kiwi complained that the lack of availability of thermal power stations in Taranaki and at the Huntly Power Station constituted an undesirable trading situation.

The MBIE-commissioned report said the EA would investigate the claim, but noted that the prices offered in the wholesale market earlier in the day of the outage did not offer sufficient incentive to turn them on, nor was there anything unusual about the outages.

Likewise the sudden drop of wind (hitting windfarms) and the clogging of a Genesis-owned hydro station were unusual but not exceptional.

Thursday’s report said part of the blame for the problems fell at the feet of the Electricity Authority, saying the reason the demand allocation notice was in such a “shambolic state” was down to both Transpower as system operator and the regulator.

It said the regulator needed to be more assertive over Transpower, noting that in the past, Transpower appeared to have not acted on earlier findings.

Hodgson and Westergaard recommended that “the EA scrutinise its relationship with Transpower, perhaps with international input, with a view to holding Transpower more firmly to the rules and contracts that bind it.”

The report also said the EA should demand that major users are able to offer enough of a demand-side response that the system can cope in the event of a short-term generation shortage, “and regulate if commercial arrangements are not reached in a short period”.

In a statement the EA said it welcomed the report and “will discuss the recommendations with Transpower to ensure a comprehensive and cohesive response”.

Woods said she would be writing to the chairs of both Transpower and the Electricity Authority requesting they provide her with quarterly updates on progress towards meeting the recommendations. Through a spokeswoman she said she would not be apologising for suggesting generators were behind the issues.

“I do not want households to be put in this situation again. Kiwis deserve more. By implementing the report’s 18 recommendations I believe we will be better placed in future.”

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