Friday, 19 April 2002

New Zealand is much better prepared for any winter electricity supply difficulties this year than last year, says Energy Minister Pete Hodgson.

“Following last winter’s supply difficulties the industry established a steering group to improve contingency planning for hydro shortages,” Mr Hodgson said. “This group has already been working for four months to ensure we are well prepared if there is another dry, cold winter.

“The steering group has developed a set of indicators, or ‘dashboard’, to predict winter supply problems. It has also established trigger points at which contingency plans can be launched if normal electricity market mechanisms become inadequate.

“A contingency planning work group is developing plans, in consultation with major users and other consumer groups, for a faster response to any difficulties, including demand management.

“A technical solutions work group has focused on reducing north-to-south transmission constraints, which came into play last winter when the normal flow of electricity from south to north was reversed due to low South Island hydro supplies. There are now clear plans for action on the national grid if a situation such as last winter’s happens again.

“The major generators are well aware of the need to manage hydro storage carefully and wholesale electricity prices are reflecting cautious use of hydro generation. Thermal generation is already running at higher levels compared to this time last year, although lake levels are similar.

“The risk of further problems this winter remains uncertain, but there is not yet any reason to sound the alarm. Lake levels and inflows, which typically trend downwards with the approach of winter, are slightly below average but higher than this time last year. It is too early to gauge their significance.

“I regret that Business NZ has mistakenly alleged a lack of preparation for this winter, when the error could have been avoided by a simple inquiry to my office.”

For more information see “winter 2002 security” on www.transpower.co.nz

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