Electricity over-regulation questioned

The Electricity Commission’s mistake over lake levels will do increase business concerns about certainty of power supply, and calls into question the current regulatory approach to electricity, says Business NZ.

“For some time Business NZ has been asking market players why spot prices have been so high in the light of the Electricity Commission’s assurances that there was no possibility of a power crisis,” Business NZ Chief Executive Phil O’Reilly said.

“Over recent months major generators Meridian and Genesis have also repeatedly questioned the Commission’s Minzone and Emergency Zone levels. Surely market players are in a better position than bureaucrats to know what’s going on in the industry.

“A fifteen per cent upward revision of the risk of power shortages is a dramatic change. Fifteen per cent of hydro stocks is the equivalent of the total capacity of Lake Benmore.

“It means the Emergency Zone level could be reached by the end of this month, given NIWA’s predicted average or below average inflows.

“Business NZ surveys of member businesses have shown high member concern about security of power supply and these concerns have been relayed to the Government and industry. This situation will only increase their concerns. How can business have confidence in regulators when they make errors of this magnitude at this time?

“We hope this degree of error will not apply to the Commission’s predictions regarding the need for transmission upgrades into Auckland and additional capacity on the HVDC Link - otherwise New Zealand business could really suffer.

“The mistake suggests the need to urgently reconsider the current over-regulated state of the electricity sector.”

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