Tuesday, 17 July 2001 Media Statement

Welcome reassurance on electricity market integrity

Energy Minister Pete Hodgson says today's electrcity market watchdog report offers a welcome reassurance that current high wholesale electricity prices are not the result of market manipulation or abuse of market power.

The NZEM Market Surveillance Committee Report follows its month-long investigation into allegations that wholesale power prices have been pushed unreasonably high. It found no evidence that any market participant engaged in or attempted manipulative activity, or used market power to limit competition in the retail market.

"This is a diligent, comprehensive and useful report," Mr Hodgson said. "I'm pleased that the committee has found no mischief behind current market conditions."

"The report has also reminded us that we have a less than perfect electricity market in some respects. That is why the Government is in the process of making adjustments to the structure of the industry."

Particular areas for improvement noted by the committee include a need to update voting powers in the governance of the market, a need for financial transmission rights and a need for more transparent information in future hedge prices.

"All of those improvements are in train under the current reform process," Mr Hodgson said. "The government is also introducing measures to encourage the development of demand-side bidding in the wholesale market, which will help address the lack of market depth the MSC has commented on."

ENDS

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