Later and longer power crisis on cards

By VERNON SMALL deputy political editor

Energy Minister Pete Hodgson is warning that emerging power shortages could plunge the country into a more prolonged energy crisis than in 1992.

"The 1992 crisis was a short crisis and in July, from memory, the rains came. We are past July. This is a later crisis and prospectively a longer one," he said yesterday after emerging from a second meeting with industry and consumer representatives.

"Certainly all of our thinking is that the rain patterns will not change until well into the spring. Well into, say, October."

Storage levels in hydro lakes had fallen to 1350 gigawatt hours against a low of 500 in June 1992.

But the graph of storage levels showed a sharp decline and "does not look pretty", Mr Hodgson said.

"The rains might come but we are assuming they won't."

The 1992 crisis sliced 0.6 per cent off gross domestic product, despite voluntary cuts of 15 per cent and an interisland ferry hooking its generators to the national grid.

The Government last week called for savings of 10 per cent for 10 weeks from the public and 15 per cent from the state sector, but data shows consumers are struggling to meet that target.

Demand on Monday was only 5.4 per cent lower than for the average of the previous four Mondays.

Wholesale power prices have also stayed stubbornly high at 33.19c a kilowatt hour on Monday against 33.32c on Sunday.

Before joining yesterday's meeting, David Russell, representing Consumer Coalition 93, a group consisting of the Consumers' Institute, the Major Electricity Users Group and Business New Zealand, called for Government action because the power market was failing.

He said price controls at the wholesale level were inevitable.

However, at a press conference Mr Hodgson again said capping prices was not the solution.

"It's a wee bit like covering up your fuel gauge and pretending that the car won't run out of petrol."

Increasing supply or reducing demand would bring prices down.

He said moves to achieve that included:

* Grid operator Transpower had removed a transmission "constraint" in Hawera which would add 2 per cent to total supply. That would also slightly increase the risk of blackouts in Taranaki, although they would not last more than 15 minutes.

* Another 175 megawatts of load had been reduced by companies bringing forward maintenance shut-downs, but that was a short-term measure.

* Most of the country's diesel capacity would soon be cranked up.

* Comalco had offered to allow more of its supply to be interrupted for short periods to increase supply in the South Island. The Cook Strait cable is a bottleneck for power flowing south.

Mr Hodgson said he did not know, and was "not fussed", whether Comalco would receive compensation from Transpower.

"People's motives do not much worry me. The result does."

But dropping lake levels were putting upwards pressure on prices.

On Monday, the cabinet approved spending of $2.25 million on an electricity conservation campaign, which would be augmented by incentives for customers to cut usage.

Some retailers would offer rebates either to individuals or communities. Meridian Energy would give a rebate of $20 each to its Christchurch customers if the city achieved overall savings of 10 per cent.

Mercury Energy already offers rebates in Auckland.

Mr Hodgson said savings should be made in the national interest although incentives offered to households were also welcome.

The biggest 150 users would be offered a free audit of their power use and large commercial users would be advised how to save on air-conditioning or "delamp" by cutting out every second or third light.

Yesterday's meeting had a "vigorous" discussion about Transpower's actions, and the grid operator would seek legal advice on what it could do to increase supply.

Major electricity users have called for the market watchdog to use its powers to intervene when there was an "undesirable situation" but Transpower wanted to be sure its actions did not trigger that.

Feature: Electricity

Energy Efficiency and Conservation Authority