High Peak Time Prices Drive Electricity Prices Up

M-Co

High Prices In Peak Demand Times Drive Electricity Price Up

Wholesale electricity prices climbed in August, primarily because of high prices during peak consumption periods.

Off peak prices were similar to those recorded in July. However, prices soared in the upper North Island during weekday breakfast times and in the early evenings as transmission lines between Tokaanu and Whakamaru, and on the HVDC that links the islands, neared maximum capacity – and these high prices drove the average wholesale price up.

Reasons for the transmission lines approaching capacity and becoming constrained include: an increase in demand due to the onset of a cold snap; the removal of Contact’s Otahuhu B station from the market for repairs; and the inability of the national grid to carry above a certain quantity of electricity from the south further north than Lake Taupo.

The further north in the country, the higher the wholesale electricity price during August. The abundance of water in the South Island hydro lakes and the low storage levels of the North Island hydro catchments compounded this price difference.

In August the top half of the North Island recorded an average monthly price of 4.48 c/kWh. In contrast, the average monthly price for Haywards, the lower North Island reference point was 3.33 c/kWh, and prices were even lower at Benmore, the South Island reference point, which recorded 2.96 c/kWh.

At the end of July, South Island storage was 2,382 GWh, 150% of the average for this time of year. National storage was at 2,629 GWh, which is 127% of the average for this time of year.

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Philip Bradley, Chief Executive
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