WELLINGTON, New Zealand--The operator of New Zealand's electricity grid says it will complete an upgrade of South Island networks by mid-2023, a year later than planned, that will allow more power to be sent north.

The state-owned company on Tuesday said that following a pause in work for industry consultation it had decided to continue with the upgrade of the Clutha Upper Waitaki transmission network at a cost of 97 million New Zealand dollars ($62.3 million).

The upgrade was initially restarted in December, part of an effort to guard against disruption from the possible closure of New Zealand's only aluminum smelter, which consumes more than 10% of the country's power. The smelter's owner, Rio Tinto Ltd., is reviewing its future.

The upgrade also could encourage more investment in hydro power, Transpower said.

Meridian Energy Ltd. and Contact Energy Ltd., which both have hydro dams in the South Island, had each contributed NZ$10 million to the initial work. 



  Write to Stephen Wright at stephen.wright@wsj.com