Info economy could be starved of electricity

Information economy could be starved of electricity

A study by The United States Energy Agency (EPRI) which found that the American electricity network is unable to handle the energy needs of an advanced digital economy has dire implications New Zealand, according to Powerco Chief Executive Steven Boulton.

EPRI analysis in a 2003 study found that the function of line networks was growing more complex because of the exacting requirements of the digital economy

It concluded that "without accelerated investment, the reliability of the power system will almost certainly degrade such that the losses due to transmission and distribution interruptions can outweigh the anticipated economic benefits [of a digital economy]"

A few months later a three-day power blackout across the eastern United States is estimated to have cost $300 billion a day in lost productivity.

Mr Boulton said New Zealand's own growth into a digital economy was placed at risk by Government plans to regulate electricity networks with a price setting regime.

He said price setting would starve the nation of quality power supply essential for an IT-based economy.

"The dependence on information technology across all sectors of the economy requires an electricity network capable of delivering more electricity at very high levels of quality and reliability.

"To follow that demand, the sector needs a massive technology upgrade - in lines, transformers and switches, and to high tech monitoring and management technology.

"Yet at exactly the time when this sustained and heavy investment is required, the Commerce Commission is establishing a price setting regime that could restrict prices and punish investment," he said.

Mr Boulton said it was critical that electricity lines companies were allowed to earn enough money to attract and enable the required investment in their networks.

The electricity lines sector has reduced its prices by 12.6 per cent over the last six years and reliability of supply has improved to lead international standards.

Powerco is a publicly listed company, listing on the NZSE in December 2000 and on the NZSE40 index on December 2, 2002. Powerco is New Zealand's second largest electricity lines company, with 290,000 electricity consumer connections in the North Island.

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