Power blackouts caused by a lack of investment and Government regulation have emerged as major concerns in a global survey of energy companies and investors.
The Under Pressure survey of 119 executives from 108 utility and utility investor companies across 36 countries was run by financial consultants PricewaterhouseCoopers.
Partner Craig
Rice, head of its New Zealand energy team, said the report, which showed regulatory uncertainty as the biggest concern for the sector across the world, had a particular relevance to New Zealand.
There was a history of under-investment in utilities, not only in New Zealand but across the world, Rice said.
The consensus view was that the situation was reaching a point where power blackouts were going to be occurring more frequently as demand outstripped supply.
The survey found Europe and Asia-Pacific (which included New Zealand) were the most attractive markets for investors, but much of this was because of the massive growth in energy demand in China and India.
Rice said the report reflected the same fear of regulation uncertainty seen here in New Zealand.
While the kind of regulations imposed by the Commerce Commission on power lines companies was clear, it needed to give a clear view of how it was going to control the sector in the future.
The commission imposed two types of threshold regulation on lines companies, one that covered the quality of service and the other prices.
All lines companies had been told what rate of price increase (or decrease) was considered acceptable by the commission, but it was going to reset these thresholds over the next two years.
It was this resetting that was worrying lines companies who feared they would be told to keep lowering prices to customers when massive investment in infrastructure was needed.
Rice said many of New Zealand's small local energy network companies were going to find it hard to get the money needed to invest in their infrastructure.
"The Commerce Commission needs to explicitly address the issue of investment," he said, "and recognise that companies need to invest to maintain their networks and to provide a Western-world standard of service to people who require electricity."
