Review of sudden spot price increase welcomed

MEUG media release, Welcome EA review, 09-Dec-10

MAJOR ELECTRICITY USERS' GROUP

Consumers welcome review of unexplained sudden and extreme increase in spot electricity prices

Media release

Thursday 9th December 2010

“We welcome the announcement today by the Electricity Authorityi

“Spot prices this morning reached 30 c/kWh that it is looking into the increase in wholesale electricity prices since the end of November” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group.

ii. The average spot price in November was 5.6 c/kWhiii. The wholesale market cost and retail margin for an average household is approximately 13 c/kWh out of a total retail price of 21 c/kWh.iv

“The last time prices reached 30 c/kWh lake levels were low and consumers were being asked to save power. That was in May and June 2008. Lake levels are currently average for this time of year. MEUG does not believe there is any imminent risk of power outages. We do not know the reason for such high power prices. That is a question best put to the generators.

“What we do know is that with such a fragile economy we cannot afford to have businesses worry about extremely high spot prices that appear to have no basis in terms of risk to security.

“The sooner the reform package announced by Government in December 2009 to improve competition and currently being implemented is bedded in the better.

ENDS

Notes:

i Refer http://www.ea.govt.nz/about-us/news-events/market-briefs-media-releases/9Dec10/

ii All spot prices at Haywards substation, just north of Wellington, on a before GST basis.

iii Refer http://www.electricityinfo.co.nz/comitFta/media_releases.home

iv MED Quarterly Residential prices to 15th August 2010, using ICP weighted average retail charge on a before GST basis to allow comparison with before GST spot prices. Refer http://www.med.govt.nz/templates/MultipageDocumentTOC____44736.aspx.

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