Spot prices soar as winter looms

Average spot prices on the New Zealand electricity market have jumped more than 50 per cent in the past week as flows into already low hydro lakes remain below normal, traders say.

Outages at key thermal power stations compounded concerns about supply as winter approached, they said yesterday.

Spot prices at the North Island reference point of Haywards averaged $149.35 a megawatt hour (MWh) in the week ended Tuesday, compared with $93.38 the previous week, according to data from The Marketplace Co (M-co).

"The country is facing another electricity crisis," said the Major Electricity Users Group. Chairman Terrence Currie said the group wanted the Government to take action on three fronts:

* A public energy conservation appeal.

* Intervention to manage uncertain supply.

* An inquiry into whether state-owned generators were making excess profits because of the high prices.

The highest average spot prices were recorded at the upper North Island Otahuhu reference point, where prices averaged $156.83.

The lowest average price of $143.82 was at the South Island's Benmore reference point, but even the weekly minimum average of $70.44 was far above normal prices.

"Obviously the plant outages and hydro situation are making it pretty clear that somebody is very worried about supply over the next few months, otherwise there would be no reason to have prices at this level," one trader said.

"There are a number of generation units that aren't available and that puts a pretty big hole in the system."

Genesis Power's huge gas- and coal-fired station at Huntly was unable to operate at its full one-gigawatt capacity as two of its four units were out for maintenance until the end of the month.

An outage at Contact Energy's 380MW Otahuhu B thermal generator over the weekend had added to supply constraints, traders said.

Hydro lake inflows remained below average for this time of year in most catchments and were less than two-thirds of normal across the country.

Flows into South Island catchments, which provide the bulk of hydro generation, were just above 50 per cent of average.

The key Te Anau/Manapouri catchments were only about 40 per cent full and steadily declining.

"That's the one we're watching very closely ... If you've got one area that's not pulling its weight, then it really places the load on the rest of the system," the trader said.

Several large industrial power users, including Norske Skog Tasman and Comalco NZ, have complained that consistently high spot power prices are starting to affect production. But a strike at Carter Holt Harvey's Kinleith mill was helping to keep a lid on demand.

- REUTERS

Electricity