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West Coast Power Stations Close

By Staff Reporter Frank Perry at 1:42pm, 25th July 2001

Low lake levels have forced the closure of three dams used for generating electricity on the West Coast.

The Waihapo, the Dillmans-Duffers-Kumara, and the Arnold dams provide the West Coast with 87 gigawattts of electricity a year, or 55 per cent of its needs.

The dams are owned by Trustpower, which said there was no alternative because only 3 millimetres of rain had fallen in the area so far this month.

Trustpower's community relations manager Graeme Purchas said storage levels were so low that turbines risked being clogged with mud.

Mr Purchas says, while there was enough capacity in high tension wires to get power to the coast from the national grid, these wires would be forced to double their load, significantly increasing such risks as circuit failures or overheated transformers.

He said the dams were originally planned for shutdown this morning but mild weather allowed them to continue generating for a few more hours to help stabilise voltage levels.

NewsRoom 2001

-- Martin Thompson (, July 24, 2001


Huh? What? Whoa? I never heard of these dams, and they are supposed to supply the entire West Coast with more that half of its power? I hope somebody can cast more light on this story. This sounds like a calamity of major proportions, waiting to happen.

-- Loner (, July 24, 2001.

Did I see New Zealand in there? I don't think they are talking about the U.S. I never heard of Trustpower.

-- Nancy7 (, July 24, 2001.

Note NZ in the header...

-- Martin Thompson (, July 25, 2001.

Dry winter hits New Zealand hydro storage lakes, power prices up Deutsche Presse-Agentur (dpa) ( July 25, 2001 )

Wellington (dpa) - An exceptionally cold, dry winter in New Zealand has reduced levels in the nation's hydro-electric storage lakes, sending power prices skyrocketing and threatening black-outs, it was reported on Wednesday.

Wholesale electricity prices on the deregulated market have hit 1 New Zealand dollar (41 U.S. cents) a kilowatt hour, up from an average 5 New Zealand cents (2.05 U.S. cents), adding thousands of dollars to monthly power bills for some users, Radio New Zealand said.

Some manufacturers who buy part of their supply on the wholesale spot market have cut production and small businesses have turned off heating, while a supermarket owner has taken out a bank loan to pay his bill, it reported.

Auckland business leader Alasdair Thompson said firms renewing power supply contracts were asked to pay up to 500 per cent more and competition was virtually non-existent as several retailers had pulled out of the market.

He said New Zealand could suffer the brown-outs and blackouts that the U.S. state of California experienced in the last northern winter, which would provoke a national disaster.

Opposition politician Gerry Eckhoff blamed weathermen who forecast a mild winter, sending the wrong signals to electricity retailers when they hedged their prices read%/home/content/users/imds/feeds/deutsche/2001/07/25/eca/0031-0004- NewZealand-Power.

-- Martin Thompson (, July 25, 2001.

Business hurt as power crisis hits New Zealand Deutsche Presse-Agentur (dpa) ( July 26, 2001 )

Wellington (dpa) - New Zealand Energy Minister Pete Hodgson has called electricity industry leaders for meetings after announcing that some sectors are in "considerable difficulty" over soaring power prices, it was reported Thursday.

Aluminium producer Comalco, New Zealand's biggest single user of electricity, said it had cut production at its South Island smelter by 5 per cent to reduce its power costs, losing up to 50 million New Zealand dollars (20.5 million U.S. dollars) in export output in the process, Radio New Zealand reported.

Hodgson summoned power industry executives, business leaders and consumer representatives for a meeting Friday, amid claims that company cut-backs following price hikes of more than 500 per cent on the wholesale electricity spot market could damage New Zealand's economy.

Hodgson said the problem arose because the free market system introduced in April 1999, when line and generating companies were forced to separate, had run into its first dry winter, and hydro- electric storage lakes were at dangerously low levels.

He said that major business users had enjoyed low prices for the last three years but were now realizing the volatility of the spot market. "Some are in considerable difficulty," he said.

The crisis claimed its first victim Wednesday when the biggest electricity retailer, On Energy, announced it was getting out of the business, having sold its customers to two state-owned generating companies.

Another big retailer, TrustPower, which shut three small power stations because their storage lakes are empty, is also considering quitting retailing, which would shrink competition markedly, Wellington's Dominion newspaper said on Thursday.

Hodgson said that unless rain boosted hydro lake levels, there would have to be a major campaign to conserve power or fire up old diesel generators.

Parliament went into emergency session Thursday morning to debate a new electricity industry bill establishing a board to set rules ensuring an efficient, fair, reliable and environmentally sustainable supply of electricity for all consumers.

It also gives the government powers to regulate if the industry cannot regulate itself.

One business leader has said that New Zealand faced the brown- outs and blackouts that California experienced in the last northern winter, which would provoke a national disaster.

dpa read%/home/content/users/imds/feeds/deutsche/2001/07/26/eca/0005-1022- NewZealand-Energy.

-- Martin Thompson (, July 26, 2001.

TrustPower warns of loss as blackouts loom 28 July 2001

As New Zealanders were warned yesterday to conserve electricity or face blackouts, another power company looked likely to pull out of the retail market.

Electricity retailer and generator TrustPower warned it may make a "small" loss in the half year ended September as a result of high wholesale electricity prices, and was looking at ways to cope with the situation.

A shortage of water in the hydro lakes has contributed to soaring wholesale electricity prices, which are proving unsustainable for electricity retailers and some industrial consumers.

Flows for the first six months of this year into the biggest hydro storage lakes - Pukaki and Tekapo in the South Island - were at their lowest in 70 years. Energy Minister Pete Hodgson warned yesterday that if it did not rain and people failed to conserve electricity, New Zealand could face a power crisis similar to that in 1992.

TrustPower, which has previously warned that its interim profit would be less than half the $19.6 million profit for the same time last year, said yesterday it was looking "a number of strategic alternatives" for the future.

TrustPower's major shareholder Infratil has questioned whether the company should remain in the retail market, and TrustPower maintains that the competitive model for the New Zealand electricity market is flawed.

Generation from TrustPower's 34 power stations is running 8 percent below average, with the shortfall having to be made up on the spot market, the company said in a statement.

Spot prices have soared to $200 per megawatt hour, spiking to $1000/MWh, compared with $20-40/MWh for the same period last year.

"Purchases to cover the generation shortfall, together with normal trading exposure, have been made at unprecedented sustained high prices adversely affecting the company's trading position," TrustPower said.

"Since this position is likely to continue in the short term, the directors believe the result for he half year to 30 September could be a small after tax loss."

Natural Gas Corporation's On Energy announced this week it would sell the remainder of its retail customers after suffering huge losses because of its exposure to the high prices.

NGC spent over $1 billion last year establishing itself in the retail power market buying TransAlta from the Canadian parent. Now it has lost as much as half of that investment and quit the market, saying it won't work now, or in the future.

Major industrial users - including the largest electricity consumer Comalco which uses 15 percent of NZ power in its aluminium plant - have cut production, losing millions of dollars.

Graeme Purches from TrustPower suggested that a price cap, such as 1992's cap of $150/MW hour - four times the normal price - would be appropriate.

Mr Purches said that in February the drought in Marlborough was already causing storage problems in that region, hydro-storage was low in Canterbury's Lake Coleridge, and also on the West Coast.

"At the same time the major generator in the South Island was spilling water in the Waitaki."

If current dry and cold weather patterns persist and New Zealanders do not conserve energy, the looming crisis will bite around early September, Mr Hodgson said after a meeting with electricity industry players yesterday.

However, a major crisis - including power blackouts - could be averted if everyone cut their use of power by 10 percent over the next 10 weeks, Mr Hodgson said. Power use in the state sector will be cut by 15 percent, he said.

He told reporters the group that met yesterday had come up with a number of ideas to help.

"Nobody is saying that it is time to press the panic button. Everybody is saying it is time to take some action."

The group would manage the situation and meet again on Tuesday.

But, if the 10 and 15 percent targets were achieved, electricity supply increased as well as other measures taken, a crisis similar to that of 1992 could be averted, Mr Hodgson said.

However the Major Electricity Users Group (MEUG) said the conservation campaign will not immediately do anything about the extraordinarily high prices currently harming the economy.

MEUG chairman Terrence Currie said a conservation campaign was only one part of the answer to reduce the crisis, which was a combination of low hydro inflows, high prices and an uncompetitive market.

"This is a crisis that won't be fixed just by conservation - we need the Government and energy industry to manage the market to ration power at a price everyone can afford."

He said high prices and lack of competition has already cost the economy many millions of dollars. "Even if a conservation campaign works, we will emerge from this crisis with a discredited wholesale electricity market."

New Zealand's growing hydro power shortage could reduce economic growth by up to 0.4 percent, ANZ bank economists said yesterday.

The greater use of more expensive thermal powered generating stations, and the flow on effect into other sectors including the scaling back of production could significantly impact the economy, ANZ said in a commentary.

"Overall, we estimate that these developments could quite plausibly reduce GDP by around 0.3 to 0.4 percent," ANZ said.

"This is a little less than the more severe 1992 power crisis, but could be compounded if the situation does not ease in the next couple of months," the bank said.

In five weeks, the 1992 crisis cost the economy $600 million.,1008,0a13,FF.html

-- Martin Thompson (, July 28, 2001.

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