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Leap In Energy Consumption Surprising

Electricity Networks Association
6 April 2004

Leap In Energy Consumption Surprising

The announcement today that energy consumption rose by 5.4% in calendar year 2002 was a real surprise, according to the Electricity Networks Association. The latest Ministry of Economic Development Energy Data File, released today, makes compelling reading according to the Association’s chairman Warren Moyes.

Despite the clear signals that gas is fast running out for major commercial and industrial customers, end-user gas consumption rose by 5.3% in the year, while electricity use was up 3.3% and oil use a substantial 8.5%.

Warren Moyes says that, while the economy grew by 4.4% over the same period, much of this growth was focused in relatively low energy use areas such as housing.

“Seeing energy use growing faster then GDP, despite rising costs and clear messages that we are facing a major gas supply crisis is very worrying, especially with the cancellation of Project Aqua fresh in everyone’s minds. The Ministry’s latest data is hardly reassuring about the role that renewable energy will play in guaranteeing future supplies: consumption of electricity from renewable sources has fallen by 6.4% over the 7 years covered in the data. We see a lot of hype about renewables but the pace of consumption has clearly outstripped new investment.”

Warren Moyes says that the Ministry’s figures on power price movements to March 2003 overlook the real fall in lines charges that occurred in the period, and therefore understate the rises that have taken place in energy costs.

“As the Aqua experience has shown us, its possible to spend very large sums on totally unproductive outcomes.”

“In the lines sector we have been facing ongoing additional costs arising purely from regulation and policy changes, and these are likely to rise even faster in the future. These costs do not add any value to the consumer at all; they simply divert our most valuable intellectual capital into ongoing regulatory debates. Simultaneously, the lines industry faces the next major phase of investment and renewal of the electricity system.

The key to New Zealand’s ongoing growth outcomes hinges on continued investment in critical infrastructure. If New Zealand is to retain its competitive edge in the world then we urgently need to concentrate more on the core issues of matching supply with demand, and having the necessary lines capacity to support the energy transfer, and much less on regulatory issues that contribute little or nothing to the economy.”

ENDS

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