KEY POINTS:
The Government says claims its energy policy could drive electricity prices up by 50 per cent are incorrect and driven by self-interest.
A report by the Centre for Advanced Engineering says electricity prices could rise 40 to 50 per cent, adjusting for inflation, because of the Government's ban on gas-fired power stations and its target for 90 per cent renewable power.
The centre - based at Canterbury University and headed by executive director George Hooper - was commissioned to do the report by the Petroleum Exploration and Production Association.
The report said the policy would suppress demand for gas for electricity-generation by about a third.
This would slow exploration and development of more gasfields, and mean a loss of flexibility and security of power supply.
The Government strategy is aimed at limiting greenhouse gas emissions, based on fears of global warming.
Energy Minister David Parker said the gas industry had made up a scenario simply because it wanted to sell more gas.#"The steep rise in electricity prices that consumers have faced in the last decade has been caused mainly by the rise in gas and coal prices that have forced up the cost of fossil fuelled electricity," Mr Parker said.
"To suggest that New Zealand gas prices will buck that recent history, and the overseas trend of increasing oil and gas prices, is optimistic and wishful thinking from a lobby group whose interest lies in selling more gas."
Mr Parker said since electricity generators were investing in renewable energy projects because they believed they were cheaper than gas.
New Zealand could return to 90 per cent renewable energy generation by 2025 by building 175MW of such generation each year.
This year 300MW of renewable energy was being built, Mr Parker said.
"With renewable, once built, their fuel is free. Wind and geothermal steam don't go up in price. The same can't be said of gas," Mr Parker said.
Chris Hall, chairman of the association and Todd Energy general counsel, said they would like to see the Government drop the planned 10-year ban on baseload thermal power stations.
If not, there would be "costs and consequences", with some explorers already pulling out of New Zealand.
Consumers could face higher energy prices than might be expected elsewhere in the world, the centre's report says.
Dr Hooper said the wholesale cost of electricity would rise to about $100 a megawatt hour under the 90 per cent renewables policy.
"That is almost double the current average," Dr Hooper said.
Green Party co-leader Jeanette Fitzsimons said it was "astonishing" the centre had let itself be captured by commercial interests.
The most power prices would go up was by 15 per cent, she said.
- NZPA
