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Electricity Prices Reflect Holiday Lull

8 February 2001
Electricity Prices Reflect Holiday Lull And Constraints

New Zealand’s wholesale electricity price reached a low at the beginning of January, with the holiday period causing a fall off in consumption. As the country returned to work the wholesale electricity price rose, reflecting the increase in demand.

With the increase in demand, transmission constraints became a feature of the market towards the end of January. A transmission line can only carry a limited amount of electricity at any time. Once it reaches its maximum capacity (or becomes ‘constrained’), the two regions on either side of the constraint are considered separate or ‘islands’ in price terms.

In January the line between Tokaanu and Whakamaru in the central North Island was constrained, splitting the North Island into two price islands. This, combined with the ongoing outage of the Otahuhu B station, meant Auckland prices diverged from those in the lower North Island.

The point commonly used to represent upper North Island prices recorded an average monthly price of 5.03 c/kWh. This was substantially above the average for the lower North Island reference point of Haywards –which recorded 3.58 c/kWh. Benmore, the South Island reference point reported an average monthly price that was lower again at 3.27 c/kWh.

At the end of January, national storage was at 3,283 GWh, which is 96% of the average for this time of year.

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