How we learned the lessons from 1992

By DANIEL RIORDAN

Remember 1992? Then, as now, dry weather resulted in South Island hydro lake levels falling to record lows — levels predicted to be reached only once in 100 years which, somewhat confusingly, is where levels were said to have reached last month.

At their lowest point then, lakes were about a third of their normal levels.

The first warnings to industry in 1992 came in March but it wasn’t until the end of May that state-owned enterprise Electricorp, the dominant electricity generator, revealed publicly there was a problem.

Prime Minister Jim Bolger blamed the SOE’s senior executives for the crisis, saying they had failed to plan for the low lake levels, but an inquiry largely cleared the SOE of any wrongdoing, attributing the crisis to lack of rain.

Now, it’s Energy Minister Pete Hodgson calling for the public to cut consumption by 10 per cent and the State sector by 15 per cent a week through to October. Then, it was state-owned enterprise Electricorp, the nation’s sole electricity generator, which called for nationwide cuts of 10 per cent, later raised to 15 per cent, to avoid rationing.

Auckland region power boards responded by cutting households’ water heating, shops dimmed their lights, businesses cut back wherever they could and stretches of the Auckland motorway system were left dark in their quietest hours.

Pubs closed early; TVNZ and TV3 moved their nightly close-down time forward by an hour or so; an interisland ferry hooked its generators to the national grid and the Government looked at cloud-seeding options from Australia.

Nationwide savings of around 20 per cent were achieved and luckily the rains came in July, averting the crisis.

This year, the Government has been quicker off the mark, in the hope of avoiding more drastic measures.

Although key lake levels never got as low as nine years ago — even taking into account the greater need for power from a bigger economy — the potential for power disruption was as great, because decent rainfall was not expected till October.

The 1992 crisis sliced 0.6 per cent off gross domestic product. Treasury and the Reserve Bank estimate the present crisis could shave $225 million off the economy — assuming target savings of 10 per cent are met — reducing GDP by about 0.2 per cent.

The impact, which includes the indirect effects of higher power prices and a potential drop in business and consumer confidence, will be worse if October’s skies stay dry.

Treasury officials have warned that if storage levels start off low and rainfall is below average, 2002 will be even worse, as there will be no buffer of higher-than-average storage levels to begin the year. They note one of the reasons for the 1992 crisis was low lake levels from 1991.

Treasury says the situation will be exacerbated if higher wholesale prices are not passed on to end users.

Starting with the last week in August, the Government called on the public to save 10 per cent a week, and the state sector to save 15 per cent, for 10 weeks, though to the beginning of October.

If these targets are met, the Government hopes to avoid having to introduce power cuts. At the very least, as some commentators have pointed out, Mr Hodgson will have focused the nation on energy conservation.

Power to the People Supplement