By CHRIS DANIELS energy writer
A call by Energy Minister Pete Hodgson for suggestions about how the electricity market might operate better has been answered by just 15 parties.
The deadline for submissions to the Government's "Winter Review" expired on Friday.
But by last night, the thoughts of New Zealand's big market players, particularly the four big electricity generator-retailers, had not been posted on the internet.
Mr Hodgson has given no commitment to changing the make-up of the industry, other than to say the suggestions received will be taken to the cabinet.
Business New Zealand has argued the events over winter show a lack of competition in the retail electricity market.
The business lobby group wants an independent cost/benefit analysis of ways to separate electricity generation from retailing.
The vertical integration of big power companies, with generators also owning large retail bases, is creating a barrier to the entry of new retail competition, it says.
It also claims that thermal generators such as Contact and the state-owned Genesis have delayed generating extra power to push rival retailers to the wall.
"The question must, therefore, be asked as to whether the backup thermal units were withheld from the market in order to leverage up the prices on the spot market," it says.
This claim is also made by Carter Holt Harvey, the nation's third-biggest industrial electricity customer.
The thermal generators, says CHH energy manager Russell Longuet, did not react to clear pricing signals and increase output early enough.
"Thermal generators need to be dispatched earlier in a drought sequence, rather than hanging back to maximise their returns and shadow price."
Allowing generators also to be retailers is criticised for stifling a liquid and competitive market in electricity hedge contracts.
Mr Longuet said if the legal separation of generators and retailers was too hard, greater transparency of hedge prices should be pursued.
He said any retailer could buy hedge contracts from any generators, but if it bought from its parent generator, the parent would have to offer at least 25 per cent of the power into the wholesale market at the same price.
Pulp and paper maker Norske Skog Tasman, the second-largest power consumer in New Zealand after Comalco, has also complained about generators operating as retailers.
General manager Mark Oughton said it became increasingly hard to get "reasonable offers" for hedge contracts in the lead-up to winter and there needed to be more competition among electricity generators.
Criticism of state-owned grid operator Transpower is expected to be a common feature of submissions. Many power customers and companies say Transpower has failed to invest in the national grid, which has led to transmission constraints. These constraints mean power prices are artificially high in some areas.
Power to the People Supplement