South Island electricity retailers are being forced to buy power from North Island generators because drought conditions are reducing hydro lake levels.
Figures from the National Institute of Water and Atmospheric Research (Niwa) show hydro lake levels have fallen to almost half the average storage capacity.
Lake Wakatipu is only 37 per cent full, Lake Te Anau 45 per cent, Lake Manapouri 41 per cent, Lake Wanaka 53 per cent, and Lake Taupo just 26 per cent full.
But higher levels in Lakes Tekapo (76 per cent) and Pukaki (78 per cent) mean the impact of the drought on hydro levels was less severe than it might have been.
Phil Bradley, chief executive of national electricity marketplace company M-Co, said lake levels were lifting the wholesale price of electricity, which was averaging just over 5 cents per kilowatt hour (kwh), compared with just over 2c per kwh late last year.
However, there was little chance of a repeat of the 1992 electricity crisis when lake levels severely affected supplies.
There was a traditional relationship between lake levels and the wholesale price of electricity, he said.
"Prices also go up in winter due to increased demand. Quite often in the early part of the winter, generators try to fill up the lakes for the really high demand periods that occur in July and August." The high cost of hydroelectricity over the past two months had led to a flow of power from the North Island to the South Island.
"It has happened before, but it happened quite a lot last month," Mr Bradley said. "The North Island generators are cheaper than the South Island generators."
Whether high prices were passed on to consumers would depend on how long lake levels stayed low, and hedging arrangements between retailers and generators.
TransAlta spokesman Merv English said his company bought electricity from a range of sources which helped protect consumers from price variations.
"We have just lowered our prices and are seeking to maintain them."
- NZPA
Drought forces South to go north for power
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