18 Apr 2013

Market 'managed hydro shortage well'

8:35 am on 18 April 2013

The Electricity Authority says improved hydro management last year should give the electricity market confidence that it can manage future dry conditions.

The first six months of 2012 had the lowest hydro inflows on record and the authority says the market dealt with that well.

Chief executive Carl Hensen says the sector had the best management of the hydro levels last year in the history of the market.

He says this should also give consumers confidence in the reliability of electricity supply.

Mr Hensen says so far there has been very conservative hydro management and the price on the futures market has been very high in the first two quarters of this year.

He says the industry is trying to take a prudent approach and trying to create options for later so the country is well served.

Mr Hensen says seasonal changes such as rain flow and hydro developments do not tend to flow through to the retail price of electricity.

"The spot market price moves up and down quite wildly from one year to another, and within the year.

"Those are the kind of movements that retailers hedge against so that they do not need to vary their retail prices up and down. Many consumers would not want to have that much volatility in their retail prices."