Power crisis? What power crisis?

17 July 2008

Power crisis? What power crisis?

The New Zealand Manufacturers and Exporters Association (NZMEA) urge the Government to learn the lessons of yet another power crisis. Continued erosion of reserve margins mean we run too close to generation capacity and are unable to cope with normal weather fluctuations. Sufficient generating capacity is not being built, transmission is being upgraded but still has too many constraints, and the domestic demand side is too isolated from pricing signals that encourage power savings. The economic impact of the savings campaign has been significant with around $3 billion having been lost to the economy so far.

Energy Minister David Parker’s comments refuting claims that recent rains have simply been ‘lucky’ are symptomatic of the problem. He said, “We don't criticise farmers for planting crops in the expectation of rain and sunshine. Likewise we do expect rain to fall and fill our hydro lakes on a yearly basis." The fundamental difference being that the farmer has invested to get more value out of the land, whereas Parker uses the unpredictability of the weather to defend the reluctance to invest.

NZMEA Chief Executive John Walley says, “There is no incentive to increase reserve margins in generation or transmission, or pass effective price signals on to domestic users. As each year passes we simply get closer to the edge as the reserve margin is consumed.”

“The generation deficit is compounded by inadequate transmission and when things get to be a problem every couple of years or so we have to rely on savings campaigns to keep industrial users and the economy going,” says Mr. Walley.

“Policy makers and the Electricity Commission have a responsibility to ensure the electricity system delivers the electricity we need with sufficient reserve margin to support operational stability and dry year performance. New Zealand has the natural resources available to generate cheap electricity but investment on a ‘just too late’ basis turns what should be a competitive advantage into an almost constant source of instability.”

ENDS

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