For its area New Zealand is well endowed with water for hydro-electric generation, the full economic development of which should take place within the next 15 or so years. The major alternative source of energy is coal but, in relation to the scale of development, New Zealand's coal resources are limited or very costly to extract. It is therefore likely that, within a period of 15 years, the increasing demand for energy will call for the use of imported fuels unless new sources are found.
The cost of power from a nuclear power station would, for at least 10 years, be higher than that of a coal-fired steam station, and New Zealand would have to depend on other countries for fuel for such stations. Atomic-power stations are unnecessary while other resources can be developed more economically. These facts have governed development of resources and will determine plans for further development.
Coal production for many years was about 2¾ million tons; then in 1953 it dropped to 2½ million for three years before increasing to a record 3 million tons in 1960. The use of coal on the railways and for coastal shipping has been steadily declining and, latterly, coal has been losing ground to oil fuel in industry. This decline has been offset by the increase in the use of coal at Meremere for electricity generation. In 1962, nearly one-seventh of the coal used was for electricity generation, one-fifth was used by householders, one-tenth by gasworks, and one-eighth by dairy factories; the railways used only 7½ per cent. The demand for lump coal remains steady, but for slack coal it is lessening, so that slack-coal dumps are a feature in many districts. Coal production fell by 370,000 tons in 1962; the number of men employed, both in opencast and in underground mines, has therefore decreased. Any substantial fluctuation in the use of coal at Meremere now has a marked effect on the industry. The changing pattern of coal usage, the probable use of natural gas, and the effects of the new oil refinery at Whangarei give the coal industry an uncertain economic future. But it must be remembered that coal at present provides one-third of New Zealand's effective energy needs, with hydro and geothermal electricity and imported oil each providing a third. The importance of coal must not therefore be underrated.
The first gasworks were erected in 1862 at Auckland and, by 1869, there were works in Wellington, Christchurch, and Dunedin, increasing to 56 in 1916 and, since then, declining to 29 in 1964. Nine are run by limited companies, 11 are combined with electricity supply (nine municipalities and two power boards), and 10 are run by municipalities and are not combined with electricity.
Electricity was first generally used for lighting, but from 1919 onwards it gradually competed more successfully with gas in heating and cooking. Electricity shortages during the Second World War halted the trend away from gas; the amount sold increased until 1948, then declined until 1955, remained steady for two years, and has since steadily improved. In 1956 the Government declared all but two gasworks were essential. In the four years ended December 1964 gas production increased 4·7 per cent to 5,872 million cu. ft. The importance of byproducts in gas manufacture must not be overlooked, particularly the 2·2 million gallons of tar and the 79,000 tons of coke a year. There were about 150,000 consumers in 1964.
The Gas Supply Act of 1908 and the Gas Industry Act of 1958 are the only two Acts which apply generally to the gas industry. The latter Act, to maintain and perhaps increase the gas industry, is administered by the New Zealand Electricity Department. A Gas Council was set up, its main work being to advise the Government on gas matters, and generally to assist and advise owners of gasworks. The Minister of Electricity is Chairman. Five members represent Government Departments; two, the Gas Association of New Zealand (Inc.); and one each, the Gas Institute of New Zealand (Inc.) and the Federation of Labour.
From 1943 to 1950 individual gasworks were subsidised. From 1951 a subsidy of 2s. per 1,000 cu. ft. of gas sold was paid until the setting up of the Gas Council. The subsidy paid by the Gas Council was reduced to 1s. 8d. per 1,000 cu. ft. in 1959 and is regarded as being paid to help to supply gas at a price reasonably comparable with electricity. The reduction provided funds for a coal freight equalisation subsidy to reduce freights to the average for each Island; this helps inland works with high rail costs. Prices for gas-making coal were stabilised until 31 March 1964 and again from 1 April 1964. To cushion the effect of this change, a coal price support subsidy was introduced diminishing by one-fifth each year. The Gas Council meets the payment of interest and repayment charges for specified periods on loans raised for approved new plant, where more efficient operation will result.
Natural gas from Kapuni in Taranaki could probably change the future for the gas industry in the North Island, and a decision about its use as a premium fuel is imminent (August 1965). If it proves practicable and the price is right, the problems faced by the industry where natural gas is available will no longer be ones of economic survival against domestic competition of electricity and of industrial and commercial competition with oil.
The State controls the generation of electricity. The Water Power Act of 1903 reserved to the Crown, with certain exceptions, the sole rights to generate electricity by water power. Delegation of these rights was later permitted and the law was finally consolidated in the Public Works Act of 1928. The State Supply of Electrical Energy Act was passed in 1917 “to regulate the generation, sale, and supply of electrical energy by the State and to provide for a system of accounts …”. This is the statutory machinery which the State Hydro-electric Department, established by the Electricity Act of 1945, took over from the Hydro-electric Branch of the Public Works Department. The Electricity Amendment Act of 1958 created a separate portfolio of electricity and the name of the Department was changed to New Zealand Electricity Department.
In 1953 the Geothermal Energy Act gave the Crown the sole right to tap and use geothermal energy and also provided for licences to be issued for the private and commercial use of geothermal steam.
In 1886 local authorities were allowed by law to supply electricity and this has since been renewed in various local body Acts. Reefton had the first public supply in 1887, followed by Wellington in 1888, and by 14 other centres from 1898 to 1908. Until 1918 there were no local bodies concerned solely with supplying power and others had no incentive to do so. The Electric Power Boards Act of 1918 allowed local bodies to be set up concerned only with supplying electricity.
This Act, amended and consolidated in 1925, allows electric power board districts to be established. There are now 41 boards, which cover almost all the settled part of New Zealand. The Act lays down the method of election of the boards, how they are to be run financially, and how their boundaries are to be fixed. Except for certain actions which need ministerial consent, the boards are autonomous. The setting up of such boards makes it possible for farmers and other consumers in the more isolated areas to obtain electricity at a reasonable cost.
In 1965 electric power was distributed retail by 31 municipalities, 41 electric power boards, and, in Southland and Rotorua, by the State. There is no uniformity in retail charges, which are generally based on units. The average number of country consumers per route-mile of distribution line is low compared with that of town consumers, so that the capital and overhead costs of rural authorities are much greater per consumer. In 1959 a commission of inquiry into retail distribution of electricity was set up.
To help to supply sparsely populated areas, all authorities, including the State, pay a levy of up to one half of one per cent of their revenue from sales of electric power. The Rural Electrical Reticulation Council makes grants from this fund in cases where, under ordinary conditions, the guarantees of revenue would be too high for the consumers to meet. By 31 March 1965, 7,688 miles of line, serving 12,766 consumers, have been subsidised at a total cost of £5,935,306. Subsidies paid during the year 1964 exceeded £220,000.
The local electrical supply authorities are the distributing or retail bodies, and the State is the generating, transmitting, and wholesale authority. On 31 March 1965 the Electricity Department had a capital outlay of £304,000,000. Completed works in operation totalled £243,000,000, works under construction £55,000,000, with a further £6,000,000 invested in plant, motor vehicles, and stocks. This money has been invested since 1911 in the networks of generating stations, transmission lines, and substations, as shown in the accompanying map. The State generating capacity in March 1965 was more than 2,250,000 kW – 1,429,000 in the North Island and 821,000 in the South. This development is summarised in the following table:
| Government-owned Generating Stations | ||
| Station | Capacity in Kilowatts, November 1965 | Date of First Operation (or Purchase) |
| North Island | ||
| Hydro— | ||
| Arapuni | 157,800 | 1929 |
| Aratiatia | 90,000 | 1964 |
| Karapiro | 90,000 | 1947 |
| Maraetai | 180,000 | 1952 |
| Atiamuri | 84,000 | 1958 |
| Whakamaru | 100,000 | 1956 |
| Ohakuri | 112,000 | 1961 |
| Waipapa | 51,000 | 1961 |
| Waikaremoana— | ||
| Kaitawa | 32,000 | 1948 |
| Tuai | 52,000 | 1929 |
| Piripaua | 40,000 | 1943 |
| Mangahao | 19,200 | 1924 |
| Thermal— | ||
| Meremere | 180,000 | 1958 |
| King's Wharf | 27,000 | 1942 (purchase) |
| Evans Bay | 22,000 | 1950 (purchase) |
| Geothermal— | ||
| Wairakei | 192,420 | 1959 |
| South Island | ||
| Hydro— | ||
| Cobb River | 32,000 | 1944 |
| Arnold | 3,060 | 1938 (purchase) |
| Lake Coleridge | 34,500 | 1915 |
| Highbank | 25,200 | 1945 |
| Waitaki | 105,000 | 1935 |
| Benmore | 360,000 | 1965 |
| Lake Tekapo | 25,200 | 1951 |
| Roxburgh | 320,000 | 1956 |
| Monowai | 6,000 | 1936 (purchase) |
The income derived from the sale of electricity to the distributing authorities is defined by statute and obtained through contracts covering five-year periods. Before contracts are negotiated, the gross operating expenditure, including interest and depreciation for the ensuing five years and the likely sales of electricity, are estimated. An amount equal to 25 per cent of the estimated expenditure is added and this additional sum provides moneys for loan repayment and capital works. The selling price is calculated so that, from the estimated sales, the gross expenditure plus the 25 per cent addition will be obtained.
In addition to the £304,000,000 invested in the State generating system, local distributing authorities have invested about £100,000,000, mainly in local distribution. This includes some generating plant and brings the generating capacity of the public supply system in 1965 to 2,336,000 kW. Moreover, many millions of pounds have been spent both by domestic and by commercial consumers on electrical equipment.
In 1964, 99·55 per cent of the total population (2,590,000) lived in a supply area; 563,000 electric ranges and 642,000 electric water heaters were in use; 3,460 units per capita were generated; and 8,303 per consumer were sold retail at an average price of 1·3548d. a unit.
When considering the per capita generation it must be remembered that New Zealand is not highly industrialised and that about three-fifths of the power generated are consumed in the home or farm. The distribution of the 7,577,489,000 units sold in 1964 was as follows: domestic, 58·18 per cent; farm, 2·93 per cent; commercial, 9·57 per cent; industrial, 27·82 per cent; street lighting, 0·86 per cent; and traction, 0·58 per cent.
In each of the North and South Islands the network of power stations, transmission lines, and substations function as one system. Control offices at Whakamaru and Islington keep in constant touch with generating stations and substations so that the fluctuating demand for power may be met at all hours.
The South Island system started in 1915 when 63 miles of transmission line linked Coleridge power station with Addington substation. When Waitaki came in in 1935, the network of lines brought the Dunedin City's generating station at Waipori, first operated in 1907, into the system. Subsequently, Southland, the West Coast, and Nelson-Marlborough were incorporated into the South Island grid, where power is conveyed at 33,000, 66,000, 110,000, and 220,000 V. Higher voltages have been used as new power stations have been built and power conveyed over longer distances.
North Island development of hydro-electric resources began in 1919 with the purchase from the Waihi Gold Mining Co. of the Horahora power station and its transmission system. (Horahora is now submerged in Karapiro Lake.) The system extended in the Waikato area and by 1925 included Auckland. In 1925 power was carried from Mangahao power station to Wellington, and this system reached Napier in 1927. In 1929 it was linked to Tuai, the first Waikaremoana station, and two years later New Plymouth was connected to the network in the southern portion of the North Island. Meanwhile, a 110,000-V line was being built between Stratford and Arapuni, which linked the two North Island systems in 1934. The map shows the present network of 50,000, 110,000, and 220,000-V lines which transmit power in the North Island.
As in the South Island, the network has been extended when new stations have been commissioned. In 1965 the North and South Island networks were at length interconnected by means of the Cook Strait cable.
Schemes must be investigated well ahead of construction, for extensive geological surveys are required to ascertain whether the rock formation at the proposed site can withstand the weight of the dam and powerhouse structures as well as the pressure of water from behind the dam. Investigational and design work takes a long time, and machinery has to be ordered well ahead. The transmission system must be expanded at the same time so that power may become available when needed. In 1957 a combined committee, consisting of members of the Electricity Department and the Ministry of Works (who are responsible for carrying out hydrology investigations and civil engineering work for the Electricity Department) and representatives of the electrical supply authorities, made recommendations on how to meet future power demands. In June 1957 the Government approved the Committee's report in principle as a basic plan for the comprehensive and orderly development of the electric power system. The report is therefore a blueprint for the future.
Committees have become a permanent feature of planning. This is the procedure used. The Power and Finance Utilisation Committee of the Electrical Supply Authorities Association (on which the Electricity Department is represented) collates detailed estimates of unit consumption and peak demand for five years ahead. These figures, revised and extended each year, show for all parts of New Zealand when and where power will be needed. The estimates are made by those with a personal knowledge of the needs and the economics of each area. This Committee's estimates are considered by a Committee to Review Power Requirements under the chairmanship of the General Manager of the New Zealand Electricity Department, with his Chief Engineer, representatives of the supply authorities, Treasury, and the Government Statistician as members. This Committee combines and projects the supply authority estimates for a further five years for the North and South Island needs and for New Zealand as a whole, also comparing them with statistically adduced national needs. The findings of the Review Committee are then considered by a “Planning Committee on Electric Power Development in New Zealand” which consists of members of the Electricity Department, the Ministry of Works, and the Treasury, and the supply authority representatives, also chaired by the General Manager. This Planning Committee then recommends the works it considers should be constructed, and when they should be constructed if the estimated needs are to be met. The review and planning reports are submitted to the Minister of Electricity, who tables them in the House of Representatives.
Future plans are affected by the fact that hydroelectric potential is mainly in the South Island and the main population is in the North. Further, maximum run-offs of water occur at different times – in the North Island, usually in winter; in the South, in the summer, when the snow melts. The Combined Committee in 1958 recommended that approval in principle be given to interconnecting the North and South Islands by a direct-current submarine cable designed for a capacity of 600,000 kW and capable of extension. The Government adopted the report and in 1958 a trial length of cable was laid in Cook Strait. The recommendation was opposed on technical grounds and in November 1958 the Government asked an English firm of consulting engineers to report on the scheme. The comprehensive report recommended in essence that power from Benmore on the Waitaki River should be transmitted to Haywards, near Wellington, by direct current at 500,000 V and that it should cross Cook Strait by means of submarine cables from Fighting Bay, north-east of Blenheim, to Oteranga Bay, near Cape Terawhiti.
Extensive and careful investigations having established that the difficulties of installing a power cable across Cook Strait could be overcome, the Government (in March 1961) approved the scheme for connecting the North and South electric power systems. The route selected was the shortest and avoided the problem of magnetic interference with ships' compasses in the approaches to Wellington Harbour. Three cables some 1,000 yards apart were laid, one of which is a spare. The cable is a pre-impregnated, high-pressure, gas-filled type with a diameter of 5 in. and weighing 90 lb a yard. The £2 million contract for the manufacture, laying, and terminating these three 25½-mile-long submarine cables was placed in 1961.
Power for the North Island is generated at Benmore, which when completed will produce 540,000 kW from six machines. First power was produced in January 1965. This scheme is probably New Zealand's largest single undertaking. The 2,700-ft-long dam gives a 305-ft head of water and has created a 30-sq.-mile lake. A building as large as the powerhouse houses equipment necessary for converting the generated energy to direct current; and at Haywards substation, Wellington, similar equipment has been installed for reconverting the power to alternating current. The £6 million contract for this converter equipment was let in 1961. In 1962 the Electricity Department started to build the 354-mile, 500,000-V direct-current transmission line between Benmore and Haywards and by January 1965 the line was completed. Some sections pass over high, rugged country.
The inter-island connection by submarine cable, the conversion equipment, 500,000-V direct-current transmission line, and Benmore station have drawn public attention away from other recent projects. In the North Island, Aratiatia, the eighth and final station to be developed on the Waikato River below Lake Taupo, commenced operation in March 1964 and this 90,000-kW station was completed in May 1964. Construction is going ahead on the 70,000-kW station scheduled for 1967 at Matahina on the Rangitaiki River; and the geothermal scheme at Wairakei has been further developed. The Government has approved the development of the Tongariro and upper Waikato Rivers involving a new 180,000-kW station at Tokaanu, which, together with the increased availability of water in the Waikato, would produce some 1,500 million units per year. Construction has commenced on an oil-burning thermal station near Whangarei. In the South Island a further 220,000-kW station is projected for operation in 1968 at Aviemore, down stream from Benmore, on the Waitaki River.
The Ministry of Works investigates on behalf of the Electricity Department suitable sites for future power projects. Data is collected on the hydrology of many rivers. In 1963 investigations included the Motu, Kaituna, Wanganui, Clutha, and Buller catchments and the Waitaki River basin.
In 1960 Comalco Industries Pty. Ltd. was granted the rights to develop the water power of Lakes Manapouri and Te Anau, but in February 1963 a new arrangement was agreed upon and the Government announced that the State would proceed with the development at an early date. It was established that Manapouri would be an economic source of power for the national network. In replacement of its rights to harness the water power, Comalco was given certain options on power so that an aluminium industry could be developed in Southland earlier than otherwise would have been possible. Stage I development of 400,000 kW from four machines involving an underground power station at Manapouri and a 6¼-mile tunnel to Doubtful Sound, with first power scheduled to be available in 1968, is now under construction. Stage II development would raise the installed capacity to 700,000 kW.
In September 1964 Cabinet authorised an immediate start on the Tongariro hydro-electric scheme at an estimated cost of £46 million. The first stage of development involves the diversion of water from some of the tributaries of the Wanganui River into Lake Taupo in order to increase the potential energy of the existing power stations on the Waikato River. In the second stage a power station will utilise the 680 ft head of water available between Lake Rotoaira and Lake Taupo. In the third stage the headwaters of the Moawhango River will be diverted into the Tongariro River and thence into Lake Rotoaira. Power stations, to be known as the Rangipo and Kaimanawa, will be built on the Tongariro River above a point where it can be diverted into Lake Rotoaira. The completed scheme will provide about 2,300 million units of electricity.
In 1962 it was estimated that the Electricity Department would spend £100 million for capital works in the following five years. The Department is paying 41½ per cent interest on loan money and provides for loan redemption and depreciation. In terms of the State Supply of Electricity Amendment Act of 1957 provision is made for a contribution from revenue towards financing capital works and the Electric Supply Account is exempt from taxation. The Department is a trading Department so that the cost of operation is not borne by the taxpayer. In 1964 a balance of revenue of more than £4 million was placed in the Reserve Fund to be available for capital works. Some idea of what will be required for the next decade to meet the cost of capital works was shown in the report of the Planning Committee on Electric Power Development which was submitted to Parliament in July 1964. Apart from an endorsement of major works which appeared in the 1963 programme, the committee listed a number of new works which would have to be constructed if the anticipated demand for electricity were to be met. Among such proposals, which in all would amount to £483,000,000, was the development of the Tongariro scheme, involving the construction of power stations at Rangipo and at Kaimanawa.
How natural gas will be used as it becomes available will affect future schemes. In 1963 the Government set up an Electricity Advisory Council, responsible to the Minister of Electricity, to deal with problems peculiar to the electrical supply industry and to ensure continuity of policy for power generation and distribution. As yet no action has been taken regarding setting up a Ministry of Fuel and Power to coordinate the application and use of the various power resources of the country.
by Victor Albert Le Page, B.A., formerly Administrative Officer, New Zealand Electricity Department, Wellington.