KEY POINTS:
Moving the $150 million Whirinaki back-up power station is again on the cards after a report into last year's winter electricity shortage.
The report makes eight recommendations on ways the electricity system can be improved to cope with dry winters, including relocating part or all of the the Whirinaki plant and running it on gas instead of diesel if the reserve energy scheme was continued.
Energy Minister Gerry Brownlee said it was an option that would be considered over the next "couple of months" along with the other recommendations. The Government would wait for a broader Commerce Commission report on the power sector before taking any big decisions.
Last year was one of the driest on record, cutting cheap hydro generation and sending spot prices soaring as the Whirinaki plant came on stream.
While the report out yesterday notes there was better co-operation within the sector than in previous dry years there were periods when the commission's security of supply policy of maximising thermal generation to conserve water did not happen.
Clarifying the Electricity Commission's role in the security of supply area should sharpen incentives on suppliers and users to manage their security risks, the report says.
"We also see merit in providing the Electricity Commission with a greater independence in monitoring and the exercise of regulatory functions."
The review, ordered by the commission, was done by energy sector consultant David Hunt and company director John Isles.
The eight recommendations on how the market could be improved are:
Ensure electricity companies face the costs of any forced cuts to consumers, or implement compulsory dry year insurance;
Review the operation and cost efficiency of the emergency diesel-fired Whirinaki plant;
Define and publish plans for emergency measures in a dry year;
Formalise the improvements to information sharing;
Improve risk disclosure around suppliers' demand expectations and their ability to supply;
Improve certainty around the commission's role in terms of resource consent access to emergency generation capacity;
Clarify the roles of the minister and the commission relating to security of supply and confirming the commission's independent functions;
Prioritise initiatives that promote competition.
