As night follows day

As I portended in my article on the drought yesterday, the probability of the electricity generators threatening price increases and famers going on the bludge is more or less one.

Hydro lake levels are falling and wholesale power prices rising as drought threatens in parts of the country.

The country’s biggest hydro generator, Meridian, said its Lake Pukaki storage was just below average, at 94 per cent, and Lakes Manapouri and Te Anau were in the middle of the main normal range.

“We are comfortable with the current situation. As always, we are keeping a close eye on conditions,” a spokesman said.

Meridian’s operating report for December shows its inflows last month were 81 per cent of average.

In its main Waitaki catchment, storage dropped from 99 per cent of average to 91 per cent during the month. Inland eastern areas of the South Island have been particularly dry.

Mighty River Power said that while industry-wide national storage was 93 per cent of average, storage at Lake Taupo, which feeds its Waikato River network of stations, was above average.

Transpower has oversight of the electricity system and says that while there had been a fall in storage to below average in the South Island, the risk of shortages over the next eight to 10 weeks remains low.

Let’s recap:  wholesale prices are rising because of the drought, yet the lakes are all just a smidgen below average, and the big bosses are all ‘comfortable’.

With a lake at 9% under average, they are “predicting” big trouble 10 weeeks from now.  10 weeks, because two and a half months sounds too long, and that nearly takes us into April.

There is exactly zero need to put electricity prices up.

At the same time the climate alarmists are all moaning about the drought, but last week they were moaning about dairy prices slumping because of global warming.  What do you think will happen to dairy prices if the drought continues?


– Grant Bradley, NZ Herald


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  • Blue West

    They all want a piece of the additional disposable income we have as a result of petrol prices dropping. Maybe they think a price rise wont bother us as much given this situation.

  • RobT

    The mark of the hungry company Manager..look for any way to jack the price up…that way his performance will look good to his superiors when he exceeds his budget predictions.
    No conscience re the down stream consequences.

    • TonyM

      No a higher price means likely less volume in a competitive market

      You need to understand how it works.

      • RobT

        That might apply with petrol and certain foodstuffs…..but electricity use, rarely gets reduced in most spheres.

        • TonyM

          And that’s why you would never stake your business on a 100% spot price unless you were willing to reduce usage when the price increases.

          The whole article is nonsense because it refers to the wholesale market which the average customer has nothing to do with.

          There must be a price signal when there is a potential shortage or there will be major problems!

          We are still a country that runs with relatively little storage and a traditionally relied on coal a lot of which in recent times has been retired and some of which has been replaced by geothermal.

          In recent years the installed generation capacity has actually decreased.

  • cows4me

    “farmers going on the bludge”, i refuse to bite.

    • Garbageman

      Cmon play fair i only come to these type of articles to see your response

  • TonyM

    I think contracts for future purchase of electricity might be rising. That might be a different to what story your trying to spin but it is an important point.

    • peterwn

      At this time of year, the operating gurus of the five largest generators dust off their crystal balls and try and figure how much water is likely to flow into the lakes as winter approaches. They also figure how to spread the available hydro generation as winter approaches. If they consider a need to conserve water they will offer hydro output at a higher price which has the effect of increasing the amount of gas/ coal generation. If they get it wrong and inflows are greater (and the wind blows harder, but not too hard) than anticipated the lakes will be 100% and they almost have to give the stuff away or spill water. Get it wrong the other way, and the gentailer has to buy expensive spot price power to meet their consumers’ demand. They can pass on the higher spot price to their larger customers, but it is not practicable (yet) to pass it on to domestic and other small customers. Where there is an overall shortage the spot price spirals upwards and at this point the ‘big boy’ consumers go screaming off to the Government to ‘do something about it’. It is rather like going to the TAB with the boss’s money.

      Some years back, Keith Turner then CEO of Meridian was the smartest kid on the block n this regard. Meridian not only ‘modelled’ their own situation, they ‘modelled’ the whole scene to figure their best strategy. Meridian would hold back hydro generation in the autumn to avoid being taken to the cleaners with a high spot price in the winter.

    • BloodyOrphan

      That’d be insider trading wouldn’t it ?

      • TonyM

        No! There is an ASX market for this. In the wholesale market you can buy power at the spot (variable) rate or purchase at a fixed price in advance.

        Sensible players on both the buying and selling side have a mix of arrangements!

        • BloodyOrphan

          Yes true, but the supplier isn’t allowed to have knowledge of those contracts, that would class as price fixing / insider trading.

          • TonyM

            It’s a market … People make offers other people buy… The contract price or offer price is available, but I’m not sure of all the details as I’m not a trader.

  • Cowgirl

    If dairy prices go up then the Greens will complain that families in ‘poverty’ can’t afford dairy anymore, and ‘oh won’t someone think of the children’. Rinse and repeat as needed.

  • Toothbrush76

    We moved to the Wairarapa in 1978 and I remember the long hot summers when the prudent farmers had their young stock off the farm and away to the freezing works by Christmas (God willing – if there were no freezing worker strikes).
    The plains burnt off and the hills were brown until the end of March. We swam every day in our home pool.
    More recently the land didn’t appear to be so brown but this year it seems that the dryness has returned.
    It seems that the cycle of change continues and the prudent farmers, if they are still there, will have acted just like they did in 1978.

  • Andy

    Lake Tekapo and Pukaki levels look Ok to me (I live in the Mackenzie)
    The local lake Opuha is critically low, because of the drought.

    The drought is on the east but the Norwest rains are keeping the Hydro Lakes full.
    Opuha is also low because of the lean snow winter that meant it didn’t get the usual spring snow melt
    The lean snow year had something to do with the long settled spells due to the southern annual mode

    That’s just my punter’s view of it.

  • Bryan

    well its raining in the southern alps tonight so that will flow down in the next few days towards the east and fill the lakes again