Energy Minister Pete Hodgson says the tight winter power supply situation is now a distinct possibility and planning needs to start immediately, but implemented progressively, to avoid a repeat of the 2001 winter power crisis.
Big industrial companies have called for the declaration of an electricity crisis, as happened in 2001, and for power rationing, as wholesale spot market prices surge to 2001 crisis levels. Prices have recently reached up to $800 a megawatt-hour, which is 10 times normal levels.
The current high wholesale electricity prices reflect the risk of a dry year, the unavailability of some thermal generation plant due to maintenance or faults; and some uncertainty about the availability of fossil fuels, particularly gas, for electricity generation later in the year. Hydro generators have been putting a high value on water, and thermal plant, mainly gas-fired, has been running harder and earlier this year.
The Major Electricity Users Group (MEUG), quoting the price spikes, has called for further restructuring of the electricity industry, with a separation of the generation and retail arms of the three big government-owned power companies, Meridian Energy, Genesis Power and Mighty River Power.
Hodgson has met various user groups and electricity industry executives this week to discuss the deteriorating situation as the country faces its second dry winter in three years. New Zealand has received little significant rain so far this month and the next predicted downpours may not be until late March-early April.
However, Meridian chief executive Keith Turner says it is too early to know whether the 2003 winter will be dry and too early to start national savings. A clearer picture of coal and gas supplies, as well as hydro lake levels, should emerge by May. Hedge contracts to cover the winter were tight and would be quite expensive, he said.
Industry commentators however, say the situation is already marginally worse than at this time two years ago. Maui, with its falling production cannot again be ramped up, as it was for three months during 2001; general power usage is up by about 5% nationally. So there is already every reason to do as much as possible to conserve lake levels and ensure transmission is as good as possible before winter.
Genesis Power chief executive Murray Jackson says the 1000MW Huntly station, presently only running on two of its four units, should be at full capacity from April. He says Genesis has enough coal and gas to meet all expected requirements for the winter.
But, not long after Huntly is due to back to full capacity, fellow generator Contact Energy is shutting down its 360MW Taranaki Combined Cycle station at Stratford for planned plant maintenance. The TCC plant is to undergo essential routine maintenance, starting April 11 and scheduled to be completed by late May.
Chief executive Steve Barrett says Contact believes it has sufficient gas entitlements to meet the needs of its Otahuhu B and TCC plants. There should also be sufficient gas to run Contact's New Plymouth station during the planned outage of TCC.
Contact is also pressing ahead with its restoration of fuel oil firing capability at its aging New Plymouth power station. A limited consent already exists that allows New Plymouth to burn fuel oil in the event of significant gas constraints, though this consent requires three months' notice before oil firing can begin.
