Energy Minister Bridges outlines questions to be answered on Auckland power outage

Energy and Resources Minister Simon Bridges has formally requested the Electricity Authority conduct an inquiry into the Auckland power outage.

All power has been restored to the 85,000 households and businesses that had their electricity cut in the early hours of Sunday morning after fire damaged cables at Transpower's Penrose substation. The two days of disruption costs millions of dollars in lost sales and one of the questions to be asked in the inquiry will be the economic impact of the outage.

Bridges said while there was always the possibility something like this could occur even in electricity systems with strong security of supply, it was important to give the public confidence that risks to power supply were being adequately managed.

The Electricity Authority is an independent Crown entity with wide-ranging powers to gather information and inquire into any matter relating to the electricity industry and make recommendations on any potential changes.

Questions the minister wants answered include what caused the loss of supply or contributed to it including potentially systemic factors such as risk management systems and asset health monitoring and maintenance practices, network design and regulatory incentives and controls.

What fire hazard mitigation systems were in place and whether they operated as intended is also to be looked into along with what actions were taken during the outage to ensure the safety of people and equipment, to communicate with those affected, and to mitigate the loss of supply and restoration.

Finally, the minister also wants to know what actions will be taken or are recommended as a result of the outage to improve the resilience of power supplies and management of outages.

Separately, the Electricity Authority said its review will consider any physical, procedural or behavioural causes of the outage to ensure that any lessons learnt are acted on by the relevant organisations, with the results going to the minister by April 30, 2015 and publicly available as soon as possible.

"We need to understand the cause of the outage and whether there are any system wide issues that need to be addressed," chief executive Carl Hansen said.

Both Transpower which operates the substation and lines company Vector whose cables were damaged in the blaze say they don't know what sparked the fire. The oil in the cables increased the heat in the blaze which took firefighters four hours to bring under control. Unlike at other substations, the cables were not buried in the trench because the volcanic rock impacted the rating of the cable when underground.

Transpower has spent around $2 billion in the past five years upgrading its aged equipment and improving security of supply in Auckland which has have five major outages since 1998. Part of that expenditure included around $20 million on the Penrose substation and the $473 million spent on the North Auckland and Northland project which from February has provided a new 220kv cable from Pakuranga to Albany. The latter gives an alternative route to move power through and around Auckland rather than relying on the single transmission line.

Transpower and Vector said there had been no report previously identifying the risk of fire at these sort of substations as possibly leading to a high impact failure.

A 2011 report by the Auditor-General's office into how Transpower, which operates the national electricity grid, was managing risks to transmission assets found that it lacked the asset information it needed to decide how it should invest in the medium to long term. However as the report came out the state-owned company had already come up with a new unified strategy Transmissions Tomorrow to improve grid performance and reliability.

The company reported an 18 per cent in full-year profit in August, reflecting higher depreciation and interest costs following completion of major grid upgrades. Net profit was $216 million in the year ending June 30 while the total distributions to the government for the year totalled $165 million.

(BusinessDesk)