27 Aug 2008

North-South power price divide

2:01 pm on 27 August 2008

South Island hydro lake levels are still very low and North Island hydro lakes are high, resuling in South Island electricity prices at least twice that in most of the north.

The National Institute of Water and Atmospheric Research says inflows to Late Taupo this month are the highest on record.

But lakes Tekapo and Pukaki have slipped to 22% of their capacity available for electricity generation.

With the South Island running short, electricity is being sent southwards across the Cook Strait cable.

But its inadequate capacity means not enough can get there, pushing South Island prices to least twice the level of those of most of the North Island.

The situation is expected to continue until late October when snow melt will start to fill hydro storage lakes.

Transpower does not expect to have a $670 million Cook Strait cable upgrade completed before 2012.

Rio Tinto, which runs the aluminium smelter near Invercargill, cut its electricity consumption by 10% in May and is still doing so. It says this is at a cost of 2900 tonnes of lost aluminium production each month.