ComCom proposes go ahead for investment to replace critical Cook Strait cables
The Commerce Commission is proposing to approve Transpower’s plans to replace and expand the capacity of the ageing undersea electricity cables that connect the North and South Island electricity networks. The draft decision would see it approve a major capex allowance of $1.1386 billion.
The Commission’s approval is for the first stage of a two-stage plan to replace and expand the high‑voltage direct current (HVDC) cable capacity and replace the HVDC control system. If approved, the current capacity for electricity transfer between the islands would be protected and the extra cable would deliver an additional 200 MW of transfer capacity.
Associate Commissioner Nathan Strong says the HVDC cables are critical electricity transmission infrastructure and vital for our national security of supply.
“Not only are these cables essential for meeting New Zealanders’ electricity needs, but they also support the country’s development of renewable energy. Installing a fourth cable at the same time unlocks an additional 200MW of capacity, which can reduce long-term electricity market costs and enable the development of lower cost renewables generation in the South Island. This has been shown to provide a long-term benefit to consumers.”
The current HVDC submarine cables were installed in 1991 and are approaching the end of their operational life. As they age, they become less reliable and failure risks increase. Cable failures would involve lengthy repair times and have a significant impact on electricity market outcomes, ultimately which could increase costs for consumers.
Transpower is seeking an early approval to enable it to secure a timely supply arrangement with the cable manufacturer.
“Getting the installation timing right is as important as the decision to invest in a fourth cable. Delaying the installation of the fourth cable has been shown to reduce the benefits to consumers —even in scenarios where electricity demand grows more slowly than expected” says Associate Commissioner Strong.
Transpower has also demonstrated that the infrastructure supporting the cables needs to be upgraded. Seismic risks at the cable termination stations and loss of the Miramar spare cable storage facility will require additional investment.
Construction is expected to begin after 2028 with the cables being installed in the early 2030s.
The investment would be added to Transpower’s total asset base and recovered gradually over the many decades the equipment is in service. Under the benefits based pricing method, these costs would be shared between electricity consumers and generators who benefit from the HVDC link.
Community and stakeholder feedback will help inform the Commission’s final decision.
Submissions close: 4pm, 29 April 2026
Cross submissions close: 4pm, 13 May 2026
More information on the Commission’s website.
Background
Transpower New Zealand Limited is the owner and operator of the national grid. As system operator it also manages the real time coordination of the electricity market. Transpower is a State-Owned Enterprise.
Since April 2011, Transpower has been regulated under Part 4 of the Commerce Act 1986 by way of individual price-quality regulation. Under individual price-quality regulation, the Commission sets the maximum revenues that Transpower is allowed to earn from its customers and the quality standards it is required to meet for a regulatory period. A regulatory period typically lasts for five years.
Price-quality path regulation is designed to mimic the effects seen in competitive markets so that consumers benefit in the long term. This includes making sure suppliers have incentives to innovate and invest in their infrastructure, and to deliver services efficiently and reliably at a quality that consumers expect, while limiting businesses’ ability to earn excessive profits.
Transpower may at any time submit a major capital expenditure proposal to the Commission seeking to invest in and recover major capital expenditure. The rules relating to Transpower’s major capital expenditure (capex) projects are set out in the Transpower Capital Expenditure Input Methodology (Capex IM) Determination. The Capital Expenditure Input Methodology sets out the requirements Transpower follows when preparing major capital proposals and the criteria that we use to review and approve a major capital proposal.