Government expected to pay for standby power plants

By KEVIN TAYLOR

Electricity generating companies could be given an incentive to stop them junking old, inefficient power stations when the Government unveils its response to the shortage tomorrow.

Market watchers are picking no radical transformation of the industry but expect the Government to intervene to ensure that sufficient generating capacity is kept in reserve for dry years such as this.

One method would involve the Government paying generating companies to maintain unused capacity.

An industry source said another possible plan was to expand the powers of a soon-to-be formed Government-appointed electricity governance board to ensure emergency generation was available for dry years.

A Herald-DigiPoll survey taken over the weekend has found more than 90 per cent of households swinging in behind the nationwide call to save electricity.

Asked if they had taken any action to save power, an overwhelming 91.7 per cent said that they had.

At the same time, more than 70 per cent of people in a TVNZ Colmar Brunton poll released last night said they were unhappy with the Government's handling of the crisis.



The country is struggling to reach a 10 per cent power savings target set late last month.

Low hydro-lake inflows have been blamed for the present power crisis, but the electricity market model set up by the former National Government has also drawn flak.

The electricity industry has decisively voted against self-regulation after more than two years of work on a self-governance proposal, involving its own board.

Mr Hodgson indicated last week that the Government was ready to set up its own body to run the industry, a provision contained in legislation passed in 2001.

The issue is unrelated to the present energy crisis, but the new body may well be thrust into the limelight almost immediately if the power crisis continues.

The Herald has also been told that some shorter-term measures to help this year's crisis are likely to be announced tomorrow as well.

One possibility suggested recently was legislation lowering the operating level of the hydro lakes, but Mr Hodgson has said that is low on the list of options.

A similar law was passed during the 1992 power crisis.

National leader Bill English told a party conference in Hamilton yesterday that the crisis was signalling another "winter of discontent".

He said business confidence was dropping and small business was counting the cost of all new Government regulations.

Relations between the Government and business froze in 2000 over plans to partly reregulate the labour market, leading to the so-called winter of discontent.

Mr English said people felt they were being blamed for an energy crisis that was not their fault.

"New Zealand needs more electricity generation, or we will have cold showers every winter."