Wednesday 4 September 2002

Briefings To Incoming Energy Minister Released

The Briefing to the Incoming Minister of Energy from the Ministry of Economic Development notes that New Zealand needs new electricity generation capacity soon.

“Transpower has recently forecast that, by 2005, assuming high load growth, existing generation is likely to be insufficient to meet demand in a dry year,” says the briefing. “The earlier than expected Maui gas field depletion also reduces the security margin in dry years as replacement fields are unlikely to provide the same opportunity as Maui to ramp up gas supply when required.”

New generation projects currently proposed include a 400MW expansion of Genesis’ Huntly power station and Meridian’s 600MW Project Aqua hydroelectric development on the lower Waitaki River in Canterbury.

The briefing says tighter supply means electricity prices are likely to rise on average over the next few years, particularly if gas prices rise significantly. It notes that the electricity industry “still has a significant way to go to convince consumers that competition is effective, prices are fair and customer service is satisfactory”.

Energy Minister Pete Hodgson said government policy would remain focused on putting downward pressure on costs and prices through competition where possible, with regulation and clear guidance where necessary. “It is also vital that New Zealand improves its energy efficiency, so that we can begin to de-couple economic growth from growth in energy demand,” Mr Hodgson said.

The Energy Efficiency and Conservation Authority’s briefing to the minister notes that New Zealand wastes hundreds of millions of dollars worth of energy every year through ineffiency. It says the National Energy Efficiency and Conservation Strategy, adopted by the government last September, will produce estimated net economic benefits of $900 million by 2012 if its targets are achieved.

Arrangements for establishing a new electricity industry governance structure, with consumer representation, are in their final stages. Decisions arising from the gas industry review begun in February 2001 are due later this year.

The MED briefing is available at http://www.med.govt.nz/about/bim2002/energy/
The EECA briefing is available at http://www.eeca.govt.nz/default2.asp

Ends

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