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Everyone's happy to pay for Reserve Generation Capacity - Yeah right!

Government proposed regulation which will result in generation capacity lying idle for 59 years out of 60 years just in case of another 'electricity crisis' has been shown to be flawed already, says Federated Farmers National Vice President Charlie Pedersen.

"A short period after the Government introduced its 'Target 10%' campaign, urging consumers to reduce their electricity demands, hydro lakes are at 105% of average for this time of year, and current inflows are at 160% of normal.

"Given New Zealand's reliance on hydro generation, it is inevitable that there will be significant increases in the spot price of electricity during dry years.

"Consumers must make decisions how to best manage the risks associated with dry winters. The most efficient outcome is achieved when each consumer is given the choice of risk management strategy rather than by a "one-size fits all" approach.

"The 'Target 10%' campaign run by the Winter Taskforce was reasonably effective in encouraging voluntary power savings by consumers without distorting the market through ill-thought through regulations and controls.

"It would be interesting to see how a cost/benefit analysis of the Government's proposal to procure a '1 in 60' dry year capacity stacks up against alternative risk minimisation strategies such as 'Target 10%'.

"Maybe the Government should be reconsidering their knee-jerk reserve capacity initiative, set to add $200 million to consumers electricity bills annually, now that nature has prevailed as farmers knew it would."

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