Todd Energy: Cheap gas favoured

Power companies are not telling the truth when they blame high gas prices for recent electricity price rises, says the boss of Todd Energy.

Richard Tweedie, managing director of the local oil and gas giant, told an energy conference in Auckland yesterday that power companies were still burning cheap Maui gas in their power stations - not the more expensive gas coming into the market.

New wholesale gas prices were around $6 to $7 a gigajoule, he said, while the Maui gas being used by the power companies in their stations was $2-$3.

"Clearly electricity prices have been sold on a misrepresentation," he said.

Tweedie said there was "significant market dysfunction" in the electricity sector, with not enough competition.

Around one-third of electricity is generated in gas-fired power stations, with gas the preferred option for new large-scale power generation.

The decline of the Maui field, with its cheap gas, has lead to natural gas prices increasing.

Mr Tweedie said Todd was investigating building its own 200-megawatt power station, rather than selling gas to the likes of Contact Energy and Genesis. Such a station would be small - for example the largest thermal station at Huntly is rated at 1000 megawatts.