Government power plan known soon

By KEVIN TAYLOR and NZPA

The Government will announce its preferred option to change the electricity market by the end of this month.

The issue came under renewed scrutiny in Parliament yesterday as a power crisis looms.

Hydro lake inflows remained critically low this week, forcing the national power savings target to be doubled to 10 per cent.

A spokesman for Energy Minister Pete Hodgson confirmed yesterday that the preferred electricity market option would be revealed at the end of this month.

Options range from little change through to major structural changes.

"This is not for this winter. This is the longer-term issue of whether the market is delivering enough reserve capacity to manage dry years," the spokesman said.

The Government indicated in late March that changes could be made to the market model introduced by the previous National Government.

Prime Minister Helen Clark, speaking on her European tour yesterday, reiterated that policy changes were in the pipeline.

"What I signalled, quite a few weeks ago now, is my complete dissatisfaction with the nature of the energy market, which I don't think gives appropriate signals about the level of investment needed to secure energy supply.

"That's why, at the same time as we manage through a short-term issue, which is the winter power supply, we are focusing very hard on the policy changes needed to get a better-functioning system."

The Opposition tried again yesterday to pin the Government down in Parliament.

National's energy spokesman, Gerry Brownlee, cited a newspaper article by Mr Hodgson, published last October, which said there was "no cause for high anxiety" about power shortages.

Mr Hodgson deflected the question by saying the full statement he made last October started with the words: "While the risk of problems in exceptionally dry years is always with us . . ."

But Mr Brownlee bored on, asking whether Mr Hodgson was still happy with another statement at the same time that there was no possibility of electricity shortages.

Mr Hodgson said he was being quoted out of context.

"I do accept we may well be in serious difficulty, and that we may end up with some social and economic disruption if we are not able to save sufficiently now."

He said that was why the state sector was asked to show leadership and save 15 per cent, and why the electricity industry was asking New Zealanders to save 10 per cent.

Meanwhile, the deadline for submissions to a parliamentary inquiry into the electricity industry has been extended.

Commerce select committee chairman Mark Peck said the closing date, formerly the end of this month, was now July 31.

The extension was made because many who would have made submissions were involved in the industry and busy with the energy crisis.

Issues the inquiry will consider include:* What the generation firms do to ensure balance is struck between thermal and hydro generation, giving security of supply in dry years.

* Plans for new generation.

* Whether electricity lines companies have made excessive profits.