Businesses wary of winter power

By Phil Boeyen, ShareChat Business News Editor

Friday 19th April 2002

Business New Zealand is urging power companies and the government to act swiftly to avoid a possible repeat of last year's wholesale price blowout.

Chief executive, Simon Carlaw, says lake levels have started tracking downwards in a similar pattern to this time last winter and little is being done to head off a possible repeat of last winter's power price blues.

"Spot prices have jumped again in the last two weeks and those companies whose electricity contracts are coming up for renewal are finding the new contract being offered is much more expensive than the last."

Mr Carlaw says there's no silver bullet to get prices down but he believes there are a range of moves that could help.

"The recommendations that came out of last year's winter review for example, or Dr John Small's proposals for a mandatory hedge market - these could make hedge contracts more readily available and could put downward pressure on prices.

"But there appears to be no move by either the power companies or the Energy Minister to begin to implement them in a timely way.

Mr Carlaw says the Minister of Energy and the power companies were also working on a cross insurance plan to make more electricity supply available but there's still no indication of anything tangible.

Last winter a combination of cold weather and low lake levels caused wholesale power spot prices to soar, putting pressure on retailers who did not have supplies covered by forward contracts.

Comments from our readers

No comments yet