he Electricity Authority, the regulator of the wholesale electricity market, is investigating why wholesale electricity prices spiked as high as $20,000 per megawatt hour (MWh) on Saturday.
Yesterday, Mighty River Power said it is seeking a price correction, after estimating the massive price spike could reduce its earnings by up to
$25 million.
The authority said it had received a notice of an undesirable trading situation and it had been informed that other notices may be lodged regarding Saturday's prices.
Mighty River Power said it would be lodging a notice, which is a step in a process for addressing abnormal market conditions, such as those on Saturday.
That followed a period of about six hours on Saturday when Mighty River was exposed to buying electricity at wholesale prices more than 200 times higher than normal prevailing prices, Mighty River chief executive Doug Heffernan said.
That could have a financial impact of up to $25 million on earnings before interest, tax, depreciation, amortisation, and financial instruments, unless the prices were corrected.
Mighty River would be pursuing a correction of the prices as provided for under the existing electricity market rules. If successful that would eliminate any material impact on the company's earnings for the current period.
Transpower chief executive Patrick Strange said the rise in prices happened during routine Transpower maintenance.
Plenty of generation was available on both sides of the constraint during the work.
"The power system was perfectly secure. What you've seen is a pricing matter, which we can't comment on," Dr Strange said.
"We, as system operator and grid owner, would not continue with a constraint if the power system security was at risk, ie there wasn't enough generation."
Transpower gave plenty of notice of its maintenance work and did it at times when it had the least impact.
