Prices for electricity have risen sharply this winter.
The Electricity Authority (EA) is facing criticism for rising wholesale power prices. Associate Energy Minister Shane Jones called the EA ineffective in regulating power companies, known as gentailers. He compared the EA to a “chocolate teapot,” saying it can’t manage the gentailers’ high prices. Energy Minister Simeon Brown also wants the EA to report publicly on power prices to prevent price-gouging.
Wholesale power prices have doubled recently, partly because New Zealand’s hydro lake levels are just 47% of normal for this time of year. EA chief executive Sarah Gillies said there is no easy solution to this supply problem. She noted that the EA is looking into why prices are so high and that they are demanding more information from the power companies.
Gillies explained that the EA is checking the market behavior and holding emergency meetings to consider options. They are also looking at ways to increase hydro generation from the lakes. A team is analyzing trading data weekly to understand the situation better.
Gillies said the EA has various regulatory tools and is focused on investment in new energy generation for the long term. However, she stressed the current issue is related to a fuel shortage and that they need to ensure everything is being handled properly.
There has been no evidence that gentailers are purposefully keeping supply low to raise prices. But businesses are concerned, stating they may close if costs don’t decrease. Households are somewhat protected from these increases for now, but this won’t last. Some retailers are also stopping new customer sign-ups.
Brown insists that there is no excuse for power companies not to invest in new energy production. He said the government has removed barriers to encourage investment and expects gentailers to build more facilities. Independent generators must also invest in more power generation.
Gentailer Mercury’s CEO, Vince Hawksworth, claims they are not profiting from high prices. He stated their profits align with other businesses and that they are working to build new energy sources like wind and geothermal projects. He also mentioned that 98% of Mercury’s sales are at fixed prices, meaning most customers won’t feel the effects of high spot prices.
Other gentailers like Meridian and Contact declined to comment.
