Power bills surge as lakes fall
Consumers who have been saving money by buying electricity at spot prices could see the tables turned as supplies tighten.
Wholesale electricity prices are rising and regularly breaking through 10 cents a kilowatt hour as concern emerges over depleted hydro lake levels in the South Island and the risk of a ‘‘dry winter’’.
The wholesale price of electricity briefly spiked above 50c/kWh on Monday in the upper South Island.
National grid operator Transpower has put South Island lake levels on ‘‘watch’’ after they dropped to 53 per cent of capacity – which is just below the bottom of the band that it considers normal for this time of year.
However, levels are not yet low enough to trigger an ‘‘alert’’ or an emergency.
Transpower currently assesses the chances of an actual shortage of hydro capacity, which could stop the turbines, at less than 2 per cent.
Electricity Authority chief executive Carl Hansen said it was taking ’’prudent action’’ by more closely monitoring the situation.
‘‘Consumers do not need to be concerned at this stage,’’ he said.
But Luke Blincoe, chief executive of Auckland electricity retailer Electric Kiwi, said consumers who had opted to buy electricity at spot-market prices would be feeling the price spikes.
The supply situation was not worrying for consumers on fixed rates or retailers such as itself which had hedging in place, he said.
‘‘The spikes are higher than we often see, but they are not a particularly bad episode if you look at previous ‘dry years’, partly because of the timing,’’ he said.
‘‘If we had low levels earlier in winter that would be more of a worry.’’
Hansen said inflows into North Island lakes had been strong and there was still ‘‘substantial spare thermal generating capacity’’ that the market could call on to conserve hydro lake levels if necessary.
‘‘We’ve seen the industry successfully manage an extremely dry period in 2012 without any problems for consumers and we fully expect them to do it again,’’ he said.
‘‘Meridian obtained consents in September 2012 that has given it access to significant additional hydro storage if the system operator triggers a national savings campaign. The current hydro lake levels are far from that situation.’’
Hansen acknowledged electricity generators had not added any new generating capacity to the grid over the past year, despite having resource consents for a large amount of new renewable generation, but he denied that indicated the competitive electricity market was failing.
Genesis Energy enraged Greenpeace a year ago by committing to keep burning coal at its Huntly power station in the Waikato until 2022 – four years longer than it had intended – to help cover any dry spells.