Hodgson fears electricity cap in winter could kill

People would die if the Government introduced a cap on electricity prices, Energy Minister Pete Hodgson warned yesterday.

Mr Hodgson issued the warning after Opposition members asked in Parliament whether he was prepared to halt the ability of electricity companies to pass on skyrocketing wholesale rates to customers.

"It seems that we have more than one politician in this House who is prepared to believe that price capping will not stop the lights going out," he said.

"The fact of the matter is that when that happened recently in California, it did make the lights go out," he said.

"And if that happened in my town of Dunedin in winter, people will die - I will not do it."

Power companies were considering passing on rising wholesale electricity prices on to consumers.

The Market Surveillance Committee announced yesterday that it was launching an inquiry into the increases, which have been blamed on poor weather leading to high demand and low hydro lake levels because of last summer's drought in the South Island.

Mr Hodgson said that only a small proportion of electricity was traded on the wholesale market.

Earlier this week he announced that Transpower would increase its transmission capacity into Wellington and the South Island.

"This will allow an extra 100 Mw to flow into the system ... which should significantly reduce the chance of substantial increases."

But Mr Hodgson's actions have failed to satisfy National's energy spokeswoman Pansy Wong.

"It's time for Pete Hodgson to exercise leadership rather than continuing to act as a bystander," she said.

Mr Hodgson said latest information on the hydroelectric storage lake levels showed storage had increased slightly from 61 per cent last week to 63 per cent this week.

"The supply of hydroelectric power remains tight and the wholesale price of electricity remains high as a consequence," he said.

- NZPA