While household electricity bills in New Zealand have generally been stable in recent years, for those exposed to the wholesale energy markets there is extreme pain.
In February, the Whakatane paper mill said electricity prices were part of the reason why the town's largest employer was closing.
At the start of April Methanex, New Zealand's largest user of gas, warned that after idling one of its three plants, 75 jobs would be lost and the company would have less work for local contracting companies.
On Tuesday, the Major Electricity Users Group, a body representing a group of companies which represents some of New Zealand's largest industrial companies which collectively employ many thousands of people, issued a grim warning.
"The system is failing to deliver affordable electricity, a failure that is seeing the lights go off in factories around the country," MEUG chairman John Harbord wrote.
In December, Norske Skog had celebrated the move of its Tasman factory in Kawerau had moved partly away from newsprint - which it has been making on the site since 1955 but demand for which is in decline - and into packaging products for growing Asian markets.
But now the mill is being closed for weeks at a time, despite strong demand for its products. Harbord warned if the situation persists, it will be out of business.
New Zealand Steel's Glenbrook site has been limiting operations in recent weeks, he said, due to surging electricity prices.
Wholesale electricity prices, and futures contracts have been above $230 a megawatt hour recently, Forsyth Barr analysts said in a note this week. This is around two to three times the long-run average.
While spikes to these levels are hardly unusual - nor are short-term shutdowns by major industrial users exposed to the spot market - Harbord said the situation for industrial users was "particularly urgent" as market pricing and analyst forecasts were suggesting prices would remain well above average for the next two to three years.
"The reality is, if the prices continue on the pathway they're on until then, there'll be a number of major industrial operations in the country that simply won't be in business anymore.
"We're looking at the loss of thousands of jobs and the hollowing out of New Zealand's manufacturing capability in some sectors or industries.
"That just seems unacceptable, particularly in a country that's blessed with an abundance of hydro and other forms of renewable electricity."
Harbord said the 2018 oil and gas ban had had a "chilling effect" for boards of international companies considering investing here, and although electricity prices were forecast to eventually fall, there was a lack of confidence this would materialise.
His members had toyed with binding together to offer a massive contract for seven to 10 years to try to bulk-buy a major contract, but now some were reluctant to sign up for contracts when they doubted they would be around.
"They see high prices continuing on indefinitely, into the future, effectively. There's no light at the end of the tunnel in New Zealand at the moment."
Although he stopped short of calling for political intervention, the MEUG chairman indicated he wanted the Electricity Authority - the sector's regulator - to examine the current pricing.
Low lake levels and problems in the gas market might explain an increase in pricing, but not to the extent seen today.
"What we'd like to see is, people who have got the tools to dig into it, digging into it, having a really good look.
"There's something in the market that's not working, when you're seeing prices in the market as high as they are."
His comments, made on Wednesday, came on the same day as analysts at Forsyth Barr, one of New Zealand's largest stockbrokers, warned that while they believed the market was functioning as it should, prices were now at a level which was likely to have the Beehive watching, and may prompt intervention from regulators.
As if on cue, later on Wednesday, Energy and Resources Minister Megan Woods revealed she had asked the regulator to look at the functioning of the wholesale market to examine whether current and future contract pricing should be so high, even though she acknowledged lake levels were low and gas was in short supply.
"I question whether they need to be as high as they have recently been," Woods said at an event for electricity retailers in Wellington on Wednesday.
Woods declined interview requests. Her office referred questions about what would happen if the EA found a problem to the regulator. She was seeking advice on what to do if the EA found the market was functioning normally.
Major companies face 'energy hardship'
Harbord is not the only one raising concerns on behalf of major users.
Forsyth Barr's note warned that commercial customers rolling over three-year contracts at the moment were facing 75 per cent increases in the electricity component (as opposed to the lines charge) of their bills.
Whether the degree of price increases is justified is up for debate, the basis for the increase is not.
"Currently, we have a fuel shortage," Enerlytica analyst John Kidd said this week.
Water levels in New Zealand's hydro catchments fell to 65 per cent of average for this time of year according to network operator Transpower, which warned this week levels were now close to the point where it would step up publication of key catchment levels.
This is the lowest levels recorded at this time of year for any April since before the wholesale electricity market was established in 1996.
Although it is forecast to rain this weekend, Transpower warned it would take prolonged rain to reverse the situation.
Kidd said New Zealand was now through the period when rainfall usually boosted hydro levels and Niwa forecasts pointed to below-average rainfall in the coming months.
Usually gas-fired generation would step in when hydro levels were low, but the unexpectedly sharp decline in production from Pohukura since 2018 meant the market was also running short of supply.
This requires coal to be burned at capacity at the Genesis-owned Huntly Power Station; even this is partly closed for maintenance.
"We're in a real crunch now. There is significant risk going into the peak demand season," Kidd said.
"The risk is the fuel is not there to support normal operation."
Although lake levels were some way off the levels at which Transpower would require conservation campaigns, Kidd said there was almost no slack in the system to cover in the event that an unexpected problem was to occur, taking out existing generation.
"Price is the ultimate indicator of stress. Prices at the moment are indicating extreme stress in both [gas and electricity] markets," Kidd said.
Both current and future pricing suggested the theme of "de-industrialisation" was likely to continue for some time, as for some significant industries there was nothing they could do to avoid using electricity.
"The concept of energy hardship is thrown around a fair bit, but typically it's associated with retail, residential customers. But I think it's fair to extend that to industrial customers now, as well," Kidd said.
"If you are exposed to electricity prices right now, and gas prices right now, then you're in a lot of pain."
One industry figure said while the situation was difficult, some major electricity users were in a situation they created themselves.
Late in 2020 wholesale prices and futures contracts were far lower, suggesting that the Tiwai Point aluminium smelter - New Zealand's largest electricity consumer - would close this year, but then surged in December as the market bet - correctly - that a deal would be reached to keep it operating beyond August.
Tiwai is 'rolling in it'
The situation for all major electricity users is not equal, however, with the deal struck between Tiwai's owner, New Zealand Aluminium Smelter and Meridian Energy, in stark contrast to those on the spot market.
Kidd released a report on Friday which estimated that Tiwai Point was saving $10 million a month for delivered electricity, at a time when it was likely to be receiving record prices for aluminium, with international markets suggesting prices had risen 50 per cent in 12 months.
Those exposed to the South Island spot market could be paying 10 times the $35 per megawatt hour the smelter is paying, Kidd wrote.
Some small relief may be approaching, with water levels now just days away from the level at which Meridian can require the smelter to curtail about a seventh of its usage, Kidd said.
"While at least something, its extent is unlikely to assuage those industrials that are already responding to price stress by curtailing production, particularly given that the price NZAS will continue to pay for the [approximately] 85 per cent of its normal load will not change."
A spokeswoman for the smelter said the company was "concerned by the lack of rain and low lake levels" and confirmed it was in contact with Meridian about the situation. She declined to comment on Kidd's research.
A long way from 'lights out'
If the situation was to continue for some weeks, ultimately Transpower could require a conservation campaign, requiring compulsory electricity savings.
Grant Swanepoel, head of equity research at Jarden, said while the market was tight, there were things that could happen, beyond rainfall.
"There's a lot of levers we can pull. I don't think we're at any risk of 'lights out'," Swanepoel said.
As well as Meridian moving on Tiwai, including scope for a larger cut to supply at the end of 2021, "the elephant in the room" was asking Methanex, which converts gas into methanol to reduce its draw, to free up more of the fuel for electricity generation.
Swanepoel conceded that such a move could be "politically messy" especially when the current shortage in gas supplies was arguably a lack of investment.
While the market was currently tight, over the next five years New Zealand electricity companies were expected to undertake the most significant build of renewable electricity generation for that period on record.
"That is the biggest chunk of renewables we've had built in this country in a short period of time," Swanepoel said.
"I don't know how you sort out the short-term problems, but it does seem like the unregulated market is sorting itself out in the medium term."
For companies currently feeling the pain of short-term electricity prices it was probably "too late" to do anything about the current crunch, Swanepoel said.
But he said any company which tried to use volatile electricity prices to improve profits was probably making a mistake anyway.
"[Chief financial officers], who normally have responsibility for hedging or not hedging electricity, quickly learn that their business is not playing the electricity market.
"Electricity is an input into their business, it's not trying to take profit or loss on the market. You've got to roll your contracts, year in, year out.
"If you can't afford to pay what the forward curve is, on average, telling you, maybe your business model isn't the correct business model. So if you have to trade electricity, you're in trouble anyway."