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Average Wholesale Electricity Prices Remain Low

6 August 2002

Average Wholesale Electricity Prices Remain Low

Wholesale electricity prices remained unseasonably low for much of July, but were affected by nationwide price spikes later in the month as demand increased and rainfall eased, causing declining storage in the hydro lakes.

The healthy inflows into the country’s main hydro lakes characteristic of the last couple of months petered out in mid-July, affecting national storage. Storage was 109% of average (2,573 GWh) at month’s end, 17% lower than the end of June, but still 94% higher than the same time last year.

Lakes Tekapo and Pukaki were down from the previous month to 65% and 58% full respectively at the end of July, while Lake Taupo’s storage had decreased slightly to 74% full.

July’s low prices saw the Must Run Dispatch Auction used for the first time since February.

Generators bid into the auction for the right to offer generation to the market at $0, to ensure they are dispatched. The Must Run Dispatch Auction has previously only been active during the Christmas/New Year period, when demand and prices are typically at their lowest.

The average half-hour wholesale electricity price for the South Island reference point, Benmore, was 3.22 c/kWh in July, a significant decrease on 4.71 c/kWh the previous month. Haywards, the North Island reference point, recorded 3.31 c/kWh, down from 4.73 c/kWh in June. Otahuhu, often used as an indicator of upper North Island prices, decreased to 3.38 c/kWh, from 4.58 c/kWh in June. -ends- 87

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