Real-time pricing big step for market

By CHRIS DANIELS energy writer

A method of publishing wholesale electricity prices launched this week is regarded as an important breakthrough in the energy market.

The price of power in different parts of the country is now published on the internet in five-minute blocks.

Toby Stevenson, chairman of the New Zealand Electricity Market, said "real-time pricing" was seen as an important evolution of the market, allowing electricity buyers to "participate more effectively in the wholesale price discovery process".

Stevenson said the change meant more information was now also available to electricity retailers, which should enable them to offer customers more sophisticated packages.

Having such detailed information online does not mean a building manager, for example, would have to sit and watch the prices coming through.

Instead a power retailer that properly used the information could gain a competitive advantage by putting together a better deal.

Previously, the public and power generators had to wait 24 hours to see what the price was the day before.

It means that a big power user can immediately reduce demand when the price is high.

This kind of change in power use is known as "demand side" participation.

A factory, supermarket or coolstore could, for example, stop using some of the more electricity-hungry Machines when the price of wholesale power climbs above a certain point.

Members of the electricity market have been moving towards publishing more information about its workings since last winter, when wholesale prices rose dramatically after low inflows in South Island hydro lakes threatened to cut power supplies.

Some businesses that had decided to buy all their electricity on the "spot market" were forced to pay up to 40 times what they were used to.

Proponents of a free market approach stress the importance of price signals getting to big power users, so usage can be cut when supplies are low and prices are high.

Political pressure on the big power companies was also behind the increased disclosure, and details of water spilled from hydro power stations is now available on company websites.

Lake levels, recent contract prices, historical bids and offers for electricity are also being published on the market's "Comitfree" website.

Comitfree