North Island power prices fall as link returns

Spot power prices in the North Island fell 32 per cent over the past week as the high voltage power link, which transfers electricity between the South and North Islands, resumed operation after an outage.

But analysts said below average water inflows over the same period meant the price did not return to pre-outage levels.

"Over the past seven days, inflows for New Zealand were only at 60 per cent of average," an analyst said.

Two-thirds of New Zealand's power is generated by hydroelectricity power stations which are predominantly based in the South Island and produce power more cheaply than thermal generators, mostly based in the north.

The average price at the North Island reference point of Haywards over the past week to Tuesday fell to $34.94 megawatt hour (MWh) from $50.38 the previous week.

Prices were little changed at the South Island reference point of Benmore, averaging $32.57 compared with $32.61.

Analysts are expecting prices in both islands to weaken over the coming weeks, possibly to as low as $15 per MWh, as demand tapers off during the Christmas break.

Data from market operator M-co showed average demand over the past week was almost static at 99,747 MWh compared with 99,983 MWh a week ago.

New Zealand's largest thermal generator, the 1000-MW capacity Huntly power station, cranked up output amid the drop in inflows. On Tuesday it averaged 642 MW compared with 550 MW the previous week.

- REUTERS