Retailers To Work With Electricity Authority On Wholesale Market Operations

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“Retailers will work constructively with the
Electricity Authority so consumers can continue to have
confidence in their electricity supply”, Electricity
Retailers’ Chief Executive Cameron Burrows says.

The
Electricity Authority has today released a review of the
wholesale electricity market from 2018 to early 2021 to
investigate competition in the market, with a particular
focus on the role of New Zealand’s largest industrial
plant, the Tiwai Point aluminium smelter.

“New
Zealand’s wholesale electricity market is a complex,
interlinked system with prices responding to many factors,
including demand, generation levels and transmission
capacity. The Authority’s review raises questions about
whether some of the settings sitting behind this system need
to be adjusted to ensure the market continues to deliver for
Kiwis.

“We have come out of a period of higher than
usual wholesale power prices recently – particularly over
the winter due to gas shortages and low lake levels –
which has been challenging for some businesses exposed to
wholesale energy prices. Since then, rainfall has helped
significantly ease both water shortages and electricity spot
prices.

“Retailers have shielded most households
from recent fluctuations in spot prices. In fact,
residential electricity prices are at their lowest level
since 2012 according to the latest MBIE
statistics.

“Those elevated wholesale prices came
off a relatively low base. New Zealand industrial users pay
the seventh-lowest price in the OECD for their electricity,
beating Canada, the United Kingdom and Germany.”

Mr
Burrows says a well performing wholesale market is crucial
to stimulate additional investment in renewable electricity
required as we transition to a low-carbon
economy.

“The electricity sector is committed to
providing secure and low-carbon energy to meet growing
demand through a massive programme of investment to deliver
the electricity required to convert carbon intensive
activities.

“Today’s pipeline of new renewable
generation projects under construction, consented or under
investigation exceeds the Climate Change Commission’s
forecast electricity demand growth through to 2035. We
expect our actions will drive renewables from 80% of
electricity produced today to around 95% within the next
five years. This provides a fantastic platform for other
parts of the economy to electrify and reduce their
emissions.

“The questions raised through the
Authority’s review are complex, in particular the
operation of the Tiwai smelter near Bluff. It is worth
noting the Authority conclude these are not driven by the
presence of vertically integrated companies in the
electricity sector.

“This review is a useful
exercise. The electricity sector is performing well, but
this is a good opportunity to look at what we can do to
improve and continue to deliver robust, reliable, and
affordable electricity for New
Zealanders.”

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