2 Jan 2011

Electricity prices now at rock-bottom levels

8:25 am on 2 January 2011

Electricity prices which shot up unexpectedly on the spot market three weeks ago have crashed to rock-bottom levels.

The unheralded spike in power prices in mid-December was so severe that some companies chose not to produce goods rather than pay for the electricity needed for manufacturing.

This enforced shut-down of productive capacity was similar to what happened during the three big power crises during the last decade.

The Electricity Authority is holding an inquiry into why the December spike happened.

However, prices have since plummeted, from about 20 cents a kilowatt hour three weeks ago to 1c or 2c and in some places less than 1c.

This has coincided with heavy rainfall in the Southern Alps filling hydro storage lakes to almost 150% of their average, requiring Meridian Energy to spill water from dams on the Waitaki River.