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Wholesale electricity market crisis & the economy

Impact on the economy of the wholesale electricity market crisis – to 28 March 2003 lost manufacturing sales total $7.2 million

”Since 1 March this year a survey of some major electricity users’ have reported lost sales of approximately $7.2 million as a result of having to respond to the extraordinary high prices in the wholesale market,” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group (MEUG). Forced demand reductions in response to these prices by these large users’ have year to date totalled approximately 29,000 MWh.

“For the week ending Friday 28th March 2003 spot prices averaged 20 c/kWh at Haywards. In comparison an average household pay about 7 c/kWh for energy as part of their power bill (and just over 13 c/kWh including line charges).

“In most cases the lost production reported cannot be recovered because these manufacturers had planned to operate 24 hours a day, 7 days a week.

“These estimates of the cost of lost sales have increased from those reported last Monday (refer MEUG media release 24th March) due to survey respondents continuing to suffer extreme spot prices and a number of new companies being added to the survey – some of which include losses since 1 March.

“MEUG first raised the issue of the crisis affecting manufacturers on 19th March and requested the Government to urgently appeal to all classes of consumer to conserve electricity immediately. Some 1½ weeks later we have seen lots of talk about reviewing policy and market structure – and we wish to participate in an effective and robust debate on that to consider all options.

“But, the economic lost to the economy right now continues to grow while public scepticism about the need for conserving electricity is muted by the half year profits recently reported by the SOE generators, unanswered questions about price gouging and the half-hearted conservation campaign to date,” concluded Mr Matthes.

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