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Energy Reform Needed

Canterbury Manufacturers’ Association.
Media Release.
25 July 2006.

The Canterbury Manufacturers’ Association welcomes comments made by Meridian Energy’s Alan Seay last week that more investment into New Zealand’s electricity system is required but his admission that the country had to draw upon all available generation capacity is yet another reminder of the need to reform the management and development of our energy infrastructure.

“In April, the concern was that there would not be enough rain to fill the lakes”, says Chief Executive John Walley. “However a month later, the rains came and the Electricity Commission and generators were assuring New Zealanders that there was nothing to worry about regarding electricity supply. Suddenly, after another weather event, there are renewed warnings that the system is stretched at full capacity and prices will increase again”.

Mr. Walley says that a pattern appears to be emerging whereby New Zealanders are either warned or reassured regarding electricity supply and pricing. “The problem is that this cycle continues to be driven by the weather forecast and if the storage lakes are receiving enough inflow or not”, says Mr. Walley.

“In the meantime, the generating companies call for increased investment yet they appear to be doing little other than blaming one another for rising prices which they pass on to consumers”.

Mr. Walley calls upon the Government to assume leadership on this matter rather than leave the decisions of investment and system management in the hands of the companies. These companies focus on maximising profits within a flawed system rather than developing the best means of supplying electricity where and when it is needed at the lowest cost to the benefit of the economy in general.

“New Zealand has sufficient hydro resources to adequately supply the country’s electricity needs at an attractive price to consumers. Yet it will not be utilised to its potential while our electrical system continues to operate with a supply deficit, and small incremental additions to generation. The generating companies may talk about the need for investment and warn that the system is operating at full capacity but they have little incentive to restructure the system without Government prompting as they stand to make less money. As we have seen, the consequences to the consumers are system failures that result in high prices and blackouts”.

“The problems within New Zealand’s electricity system will not be solved by forecasting the weather nor will electricity users be content with the excuse that one company has to raise prices due to similar actions or the lack of action from another”.


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