Labour Invents Power Crisis

The electricity market has prevented a 1997 repeat of the 1992 hydro power crisis, in spite of Labour's gloomy predictions, Energy Minister Max Bradford said today.

"Alarmist warnings by Labour's Pete Hodgson, who claims we are on the brink of a power crisis which the market cannot signal, are both unhelpful and untrue. In fact, in a dry year such as this one, we have the market to thank for the fact we are not in a similar situation to 1992," Mr Bradford said.

"The market has improved management of hydro resources by sending out early warning price signals when there was still time to conserve water, instead of repeating the 1992 mistake of flat prices right up until the lakes ran out of water."

New Zealand was highly dependent on its hydro lake storage and the market had enabled generators to be responsive to the development of low lake level situations, Mr Bradford said.

"The Government is working towards further competition in electricity generation, including the possible split of ECNZ, which should make the market and generators even more sensitive to low water situations."

The wholesale electricity market had put hydro data at the finger tips of power companies who need to forecast their demand and bids. Good information and accurate pricing signals provided far greater ability to plan ahead and manage risk, Mr Bradford said.

"That is precisely how the market was intended to work."