Both Transpower boss Ralph Craven and Contact chief executive Steve Barrett yesterday warned that a prolonged review of alternatives to the central North Island national grid upgrade risked the reliability of New Zealand's electricity system.

Barrett said his company's greatest worries were:

· a public perception that the review meant there may be no need to upgrade the grid into Auckland;

· increased risk of reduced security of national electricity supply;

· reduced competition because of the development of a regionalised rather than national grid;

· reduced scope for a balanced mix of new generation developments, especially wind and other renewables;

· a slide back to central planning that could affect Contact’s plans to build the 380MW gas-fired Otahuhu C station in south Auckland by 2010.

“Contact has no doubt that a grid upgrade into Auckland is essential, as it will be in other parts of the country,” Barrett said.

Craven said Transpower still believed the upper North Island power system would be at risk by 2010 unless new investment was made.

Their warnings came after Energy Minister Trevor Mallard instructed Electricity Commission chairman Roy Hemmingway to investigate alternatives to Transpower's pylon proposal and to widely consult with affected local communities.

Transpower intends to soon select one of two preferred routes for building a new 400kV transmission line through the central North Island to south Auckland.

Craven said the commission believed it would need over a year to conduct its consultation and investigate alternatives, which would delay Transpower’s proposed project.

Hemmingway said if his commission found alternatives to the transmission upgrade were superior there was still no mechanism to put them in place.