10 April 2002

Recent steps by Energy Minister Pete Hodgson to free up more electricity supply are both welcome and overdue, says Business NZ.

Chief Executive Simon Carlaw says the 'cross insurance' arrangement - creating a common industry reserve rather than individual generator reserves - should help modify some of the current pricing behaviour by increasing supply and putting downward pressure on prices.

"This scheme needs to be implemented now," Mr Carlaw said. "Generators and retailers have been all too quick to inflict very large price increases onto small, vulnerable businesses. They have been less quick to take steps that would take the pressure off those businesses' bottom line. It has taken too long for tangible evidence of a real market to emerge.

"Winter is coming fast and increased electricity use is imminent. The lessons of last winter are well documented. There is little sign that enough has been done to avoid the same problems if supply problems happen again.

"There is no excuse for the economy to be subjected to this for the second year running, with as few defences as were evident twelve months ago."

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