CMA hosts public presentation for report

Canterbury Manufacturers’ Association

1 September 2006.

CMA hosts public presentation for electricity report.

The Canterbury Manufacturers’ Association [hosted/is hosting] a public presentation on Saturday 2 September 2006 to report on the findings from a project by Andrew Young and Paul Guy and a number of members titled, ‘Will it take more Blackouts before we see the Light? - A Systems Approach to the New Zealand Electricity Industry Issue’.

The project was commissioned by the CMA in early 2005 in response to members’ concerns regarding the cost and reliability of New Zealand’s electricity supply. CEO John Walley was the primary supervisor for the project which was undertaken by Mr. Guy and Mr. Young who have recently completed their Master of Business Administration (MBA) degrees at the University of Canterbury.

“This report shows that New Zealand is heading towards a situation where the demand for electricity will outstrip supply in less than 5 years”, says Mr. Walley. “The current system is failing to deliver to its customers, whether they are businesses or the individual household. Over the past decade, the cost of electricity has constantly been driven upwards and there have been problems with transmission as this year’s Auckland blackout showed. The hope is that the E3P station at Huntly and a variety of wind farms will sustain our needs”.

“Andrew and Paul’s thesis and this report not only illustrate the flaws in the current system since the reforms of the 1990’s but it also shows there will be no improvement unless there is a shift away from the incremental, ‘just-in-time’ (often just-too-late) thinking for justifying investment”.

Mr. Walley says that New Zealand has sufficient hydro resources that once unlocked could adequately supply the country’s electricity needs at an attractive price to consumers. “Given that the market is shaped in favour of the generating companies, there are no incentives to provide investment for further base load generation or the transmission capability to move power to where it is needed”.

“New Zealand can have electricity that is in the highest decile for reliability and quality of supply and lowest decile in price”, says Mr. Walley. “However, as this report shows, there needs to be direction and certainty for the industry”,

“Government can provide long term leadership and can facilitate transmission upgrades. The question is will this Government and any that follow demonstrate a long-term view of this problem as this grows increasingly urgent as time passes”.

ENDS

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