NEW ZEALAND ENERGY 2006

NZ utilities face difficult environment

GLOBAL ratings agency Fitch Ratings says the outlook for New Zealand energy utilities has worsene...

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The New Zealand Press Association reports Carolyn Martin, head of Fitch's utilities team in Sydney, as saying the agency had placed the sector on a negative outlook in 2005 and the situation had only worsened so far this year.

The industry was facing gas supply shortages later this decade, an uncertain environmental outlook due to the government scrapping its proposed carbon tax, and delays in gaining approval for upgrading the national electricity grid.

There was also the threat of government intervention through such bodies as the Commerce Commission.

Balancing security of supply, price and environment concerns would be difficult, according to Martin.

Last week ratings agency Standard & Poor's downgraded its outlook for Transpower from stable to negative after the Commerce Commission’s threat to regulate its pricing.

These revisions sound a warning to New Zealand’s energy network companies that their ratings may be weakened through any government intervention in their businesses.

The Commission is next month due to decide whether to impose restrictions on the operations of national electricity grid owner Transpower, major networks company Vector and small Hawke’s Bay electricity lines company Unison.

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