Power prices rocket 90% for smaller businesses

Media statement Thursday, April 24th, 2003

Power prices rocket 90 per cent higher for smaller businesses

The unfortunate effect from the electricity crisis is massive power prices for smaller exporters as they come off contract, reports the Employers & Manufacturers Association (Northern).

New contract power prices are soaring up to 90 per cent on top of increases up to 65 per cent since 2001.

"The Employers & Manufacturers Association has been banging on about this for three years now and we're no nearer seeing the issue addressed let alone fixed," said EMA's chief executive Alasdair Thompson.

"Fuel shortages (hydro water reserves, gas and coal) are 70 per cent of what they were at this time of the year before the big dry in 2001. The situation is at least as bad as in 1992.

"It's not only major users being punished with unexpected price hikes.

We're getting regular reports of smaller businesses facing massive contract price increases, many exporters amongst them.

"They find they have no option but to pay up to 90 per cent more power.

Residential users will be joining the protests too when they face rolling power cuts.

"The power supply situation is a total shambles, and all so unnecessary.

New Zealand was given fair warning this could happen in 2001.

"Our coal reserves are equivalent to the energy of 50 Maui gas field yet we are scrambling to import coal from Australia.

"Industry has every right to to be disgusted with the performance of the electricity industry and Government for failing to sort it out.

"Government appears relaxed about the crisis. Perhaps behind its thinking is it can be used to centralise decision making in the industry, or even re-nationalise it as it did with ACC and prison management.

"However Government has failed to take the steps necessary to provide a satisfactory framework within which the electricity market can work.

"For example, we have repeatedly called for:

* The early establishment with the industry of a central strategic energy planning function (not central government planning, but central planning by the industry facilitated by government)

* Ensuring residual Maui gas is fully extracted

* Increasing the promotion of oil and gas exploration and development

* Ensuring gas pipeline transmission systems are open to all suppliers,

* Changing the RMA to reduce time from generation to supply

* Use coal in the short term.

* Require Transpower to invest in removing transmission constraints. An efficient and unconstrained grid is important for a competitive market

* Requiring the return of loss and constraint rentals to source regions.

* Encouraging private sector, small scale and embedded generation to boost demand side participation and demand management.

* Seek real time spot market pricing.

* Either deal with vertical integration or require mandatory hedge volumes to be made available through a hedge market.

* Require generator/retailers to respond with a price, and if prices offered are seen to be too high, then call in the Commerce Commission to investigate.

* Establish an efficient fuel market.

Comments: Alasdair Thompson tel 09 367 0911 (b)

09 303 3951 (h)

0274 982 024

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