New Zealand likely faces electricity shortages

The risk of electricity shortages in New Zealand is a growing likelihood if new electricity generation does not come on line in the next few years, electricity industry sources believe. With the Maui gas field expected to be depleted in two years and generation and other industry competing for dwindling gas supplies, significant investment in the industry is seen as necessary to keep up with the growing demand for energy.
Threats from the government that electricity prices will be capped have encouraged existing industry players to shy away from investing millions of dollars in new power stations because, like everyone else, they want a return on their money.

The industry claims that increased electricity prices are the only way to guarantee that new generation will come about. And price rises are expected over the next few years. Not one large increase, but a number of small, graduated steps designed to make the rises more palatable to consumers as well as make the rises more manageable.
TrustPower has already announced an average price rise of 8.6 % from July 5 for South Canterbury consumers and taken some flak for doing so. But its major competitor in the district and South Canterbury's largest electricity retailer Contact has indicated a price rise of its own is just around the corner.

TrustPower came into South Canterbury in November 2000 reducing power bills by offering a 10 % prompt payment discount compared to Contact's 5 %, which meant an average consumer using 8000 units would save $ 51 per year. Contact has since increased its discount and TrustPower added a further 5 % discount under its "friends" scheme.
TrustPower, however, was worse off under last year's drought and power shortage producing in a good year about 40 % of its own generation needs compared to Contact's which generates 100 % of its needs cushioning the effect of the crisis. But though the government has been trying to introduce competition into the domestic market, five network companies around the countrystill only have one retailer operating on their networks, and 20, including South Canterbury, have just two. The government has said at least three retailers in each area are necessary for true competition.