Power crisis nearly over, say economists

Warm weather, lots of rain and power savings near the 10 per cent target have sent wholesale power prices back down.

Economists say the power crisis is nearly over, but Winter Power Taskforce co-ordinator Patrick Strange, tasked with promoting national savings, says "not yet".

Institute of Economic Research economist Doug Steel said it was premature to suggest that the market was clear of problems for the winter.

"There is still uncertainty, and the rain may not continue through the winter, so it's a little early to crack open the champagne.

"The risk is still there, but has certainly diminished over the past few weeks. We are seeing the risk to economic growth easing quite a bit," Mr Steel said.

New Zealanders posted a national power saving of 9.9 per cent yesterday, the highest since monitoring began on May 1 and just short of target.

Power prices have fallen to 7.11c/kWh from over 30c/kWh in mid-April. The hydro lakes hold 84 per cent of their capacity, and rain is flowing in at its average for this time of the year.

More rain is forecast for the coming week.

Wholesale prices are now only a couple of cents/kWh higher than their average for this time of the year.

Dr Strange maintained people had to keep trying to reduce power consumption by 10 per cent.

He said hydro stations had to run when heavy rain fell and that helped wholesale prices drop.

Economists said that New Zealand's hydro system had capacity for storing 10 weeks' supply only, so there was always a risk.

Dr Strange said that the normal situation had been exacerbated by the shortage of gas, due to the Maui field's near depletion.

- NZPA, STAFF REPORTER