Winter power supply

Low rainfall this year has reduced the amount of electricity that can be generated by our key hydro lakes, and hydro lake levels have fallen below the ‘minzone’. The Minzone is a measure used by the Electricity Commission that indicates hydro storage is lower than average and that action should be taken to conserve water to ensure there is enough to last through winter.

The electricity industry is working hard to manage winter power situation and ensure that we have enough electricity to last through the next few months. It has set up a website www.powersavers.co.nz with information on electricity supplies and tips for saving power.

Power stations that are not affected by the dry conditions, for example the North Island’s thermal generators, are producing as much electricity as possible to conserve water in our major hydro catchments. To ease the pressure on our electricity supply, the reserve generator at Whirinaki is running, and part of the New Plymouth power plant has been re-commissioned.

New Zealander’s need to be prudent in their use of electricity; saving power and reducing electricity demand now will help reduce the possibility of power cuts this winter. Some of New Zealand’s largest industrial electricity users are already reducing their usage and saving power.

RFP Reserve Energy Options

The Electricity Commission (the Commission) is requesting proposals from parties that the Commission could contract with for the provision of short-term reserve energy options.  Such options can be in the form of a reduction in electricity consumption, or additional generation supply (Reserve Energy). 

This request for proposal (RFP) is being undertaken as a contingency measure to reduce the strain on the electricity system, being caused by the lower than average hydro storage situation.

The RFP closed on 7 July 2008.

Consultation on appropriation proposal for reserve energy

The Commission has released a consultation paper on an appropriation change proposal for Reserve Energy and Emergency Measures. The Commission proposes funding potential 2008/09 costs through an increase in the Reserve Energy and Emergency Measures appropriation, ranging between
$55 million and $165 million.

The Commission requires additional funding for the running of Whirinaki and may require additional funding for reserve energy contracts and/or a public conservation campaign. The proposed appropriation increase for fuel for Whirinaki is between $55 million and $110 million.

The Consultation closed on 2 July 2008.

Why are lake levels important?

New Zealand gets up to 70% of its electricity from hydro generation, which is usually clean and cheap energy. However, our hydro lakes are shallow and narrow, which means we can only store between six and seven weeks of energy when they are full. This is low in comparison to other countries like Norway that can store a year’s supply of energy in hydro lakes. If our lakes are not topped up by regular rain, supply can get tight, particularly in winter when demand for electricity is at its highest. In these situations, the industry has to carefully manage hydro storage to ensure it lasts until the next rain.

Who is responsible for managing hydro lakes?

The company who owns the generation is usually responsible for managing the hydro lake, and they may have to work within limits on water levels imposed by the local regional council.

Who sets power prices?

Retail prices are set by electricity retailers. These include the cost of generating the electricity, as well as the costs of moving it from a power station to your home or business, the cost of metering how much electricity is used, a contribution to the costs of operating the electricity system, and a profit margin. Wholesale prices are set in the wholesale market where buyers and sellers of electricity compete for business.

Who decides who generates electricity?

Each generator makes its own decisions about whether or not to produce electricity. Their decisions may be influenced by the market price of electricity and the availability of fuel. Every half hour the System Operator decides which generators will be used based on price. The Electricity Commission does not have the authority to make a generator produce electricity or to prevent it generating, except in major emergencies.

Who looks after security of supply?

The electricity companies and Transpower, as the system operator, look after security of supply in the short term as part of the normal operation of the electricity market. Over the medium and longer term, the Commission is responsible for monitoring that enough generation is being built to meet demand.

What is the Whirinaki generator?

It is a reserve generator owned by the Crown. It runs on diesel fuel and the Commission funds its operation. It is designed primarily as back up generation in dry years, or in case of an emergency shortfall in generation, such as if a major generator breaks down.

What is the industry doing to improve security of electricity supply in the future?

New generation is one way that the industry can improve the security of electricity supply in the future. There are new geothermal, hydro, wind generation projects under construction and several more have been granted consent to go ahead.

The Commission and other industry participants are also working together to facilitate and promote electricity efficiency, which could save electricity and reduce the growth in demand. Electricity efficiency can provide a cost-effective way of reducing the need for new generation and transmission capabilities.

Where can I find more information about winter power issues?

Detailed information about the Commissions role in ensuring security of supply is available on this website under ‘security of supply’.

For information about current hydro storage, lake levels and electricity demand, and simple tips for saving power please visit www.powersavers.co.nz