NZ electricity industry working to avoid blackouts, CEO says

NEW Zealanders should feel comfortable the electricity industry is working to avoid blackouts as seen in Australia and the United Kingdom, Electricity Authority chief executive Carl Hansen says.

Around the world, the risk of power blackouts as a result of limited generation capacity was not uncommon.

Writing on the

authority’s website, Mr Hansen said the UK was warned this time last year people could be facing blackouts over the festive season due to a lack of capacity.

Closer to home, last month Queenslanders were warned they might be asked to conserve electricity use over summer to prevent blackouts.

‘‘Against this backdrop, it’s important how our industry has changed to better manage dry winter situations.’’

Leading into winter this year, there was ‘‘extremely low’’ rainfall around the South Island hydro lakes. The low inflows meant less generation capability heading into the cold months when electricity demand was at its highest level, he said.

The industry monitored the situation in preparation for launching a public conservation campaign just in case it was needed. As it turned out, it was not needed.

‘‘Had we faced this same situation 10 or 20 years ago, people could have been reduced to shorter showers and eating dinner by candlelight.’’

A range of different factors had made the market what it was today, enabling it to manage dry winters effectively, Mr Hansen said.

The biggest impact had been the introduction of transparency measures for retail electricity companies and large industrial customers and a plan where customers were compensated if they were asked to conserve power.

The ‘‘stress testing’’ scheme was introduced in 2010. Under the scheme, electricity retailers and large industrial companies had to disclose what they stood to lose if wholesale market prices rose to very high levels, he said.

The idea was they could not skimp on insuring themselves from high prices — by buying specific financial products — and complain when prices rose.

That sort of activity had played a large part in driving conservation campaigns in the 2000s.

If a conservation campaign was launched now, electricity retailers would have to pay residential customers and other small consumers $10.50 a week, or nearly $5 million a week for some retailers, Mr Hansen said.