Power price rises hitting export competitiveness - Fonterra

Fonterra's chief operating officer says the dairy co-op had been raising concerns about the lack of resilience and cost-effectiveness in the energy sector for some time.

By RNZ

Fonterra says rising wholesale electricity prices and uncertainty in the gas market are impacting New Zealand’s export competitiveness.

Wholesale electricity prices doubled in the past three weeks, and rose to more than $900 per megawatt hour last Wednesday, with New Zealand’s hydro lakes storage drastically lower than normal for this time of year and households warned to expect big increases in their bills.

As energy woes mount, there is increasing pressure on power companies to act.

Fonterra chief operating officer Anna Palairet said the dairy co-op had been raising concerns about the lack of resilience and cost-effectiveness in the energy sector for some time.

“We are concerned that the high wholesale electricity prices and uncertainty in the gas market are impacting New Zealand’s export competitiveness.

“We are confident that energy remains available to process milk over the coming seasonal peak, but the current situation is adding significant cost to both the co-op and our shareholders as we cannot simply pause operations.”

She said longer-term solutions were necessary to ensure energy remained affordable.

Meanwhile, meat processor ANZCO Foods said increased wholesale energy prices were having a significant financial impact.

Chief executive Peter Conley said at current rates the company was forecasting it would pay double for electricity this year compared to last year.

“We are closely watching our electricity use and employing a range of options to make savings where possible, while still operating all our sites.

“We are managing our assets and production capability as normal and haven’t reduced production as a result of the higher electricity costs.”

Meat company Alliance, which runs seven plants around the country, said it wasn’t impacted by the rising energy costs as it has long-term supply contracts.

- RNZ