Media release May 10th, 2000

Gas shut down a test for energy markets

This weekend's big gas shut down will show us the price response of our wholesale electricity market, says the Employers & Manufacturers Association (Northern).

"It will give us an insight into what happens to electricity prices when a significant shortage of energy occurs," said Alasdair Thompson, the association's chief executive.

"Reliable energy supply is very important to the region's industry.

"We are pleased to have Government and market managers assurances that price signals will see new investment attracted to the industry to maintain a competitive and reliable energy supply, but we have yet to see proof they will ultimately work.

"After all, a spurt of new investment a few years back in Stratford and some other smaller generation capacity occurred when the market was not signalling the need for it. That led to the write off of hundreds of millions of dollars in capital.

"It is to be hoped investors won't misread price signals in future when new generation capacity really is called for.

"Our main concern is that investment takes place early enough to meet growing demand, recognising the considerable time lag between prices going up, and new production coming on stream, and allowing for resource management issues.

"The ultimate test may come in about five years if Maui gas is finally depleted."

Further comments: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme) 025 982 024 (mob)

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