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Electricity investment problems remail

Electricity package tackles dry-year supply but investment problems remain

Business NZ says the Government had probably waited as long as it could before intervening to address the extreme price pressures on businesses and the threat of power shortages to all consumers.

Business NZ Chief Executive Simon Carlaw said the Government's main response to the overall situation - a centralised Commission - was not ideal, but should at last produce some movement on dry year supply and transmission constraints.

He said there was some relief that the requirements that may be put on generators to offer hedge contracts seemed relatively light-handed. "It is imperative that we get the hedge market working more actively than it has, otherwise businesses will continue to be ravaged by the spot market.

"I am pleased to see the Government has responded to our call to facilitate a demand exchange so consumers can on-sell electricity. Demand-side management is an essential part of a functioning market, but up till now has been largely overlooked given the urgency of supply issues.

"It remains critical that work be done to develop a robust, strategic, long-term plan to address the continuing uncertainties over fuel supplies and remove impediments to investor confidence. Energy is a key enabler of sustained economic growth and we should not leave the development of a secure energy future to a regulatory body that has yet to demonstrate scope of its activities or its effective relationship with the Crown."

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