Cheap power - but not for you

Hydro-electricity storage lakes in the South Island may be overflowing, but consumers will not get cheaper electricity.

Heavy weekend rain filling the lakes caused wholesale power prices on the spot market to plummet - including, at Benmore, to zero - before increasing again as the cold snap hit.

"This is an unusual occurrence, to have so much water in our lakes at this time," Meridian Energy Ltd spokeswoman Claire Shaw said yesterday.

"But it is great news because we have good storage for the winter compared to last year."

The daily average electricity price at this time last year was more than 30c a kilowatt hour (c/kWh).

This compares with prices from the past few days of about 5c or 6c.

Despite that, because domestic users are shielded from extreme fluctuations in prices by the power retailers, the cost of electricity will not go down.

"Those who feel they should benefit from extreme low prices should also remember we have situations, when fuel is scarcer, of extreme high prices.

We have a middle-of-the-road tariff that prevents that," Miss Shaw said.

The only consumers who would benefit were those few who bought electricity at spot-market prices.

While they benefited from the present very low prices, they also faced extreme high charges when the market changed, she said.

M-co, which provides electricity market information, estimated New Zealand's total lake storage at the weekend was 142% of average, compared with 62% at the corresponding time last year, when an electricity shortage was feared.

The weekend rain caused flows into New Zealand's hydro-electricity lakes up to almost 500% above average.

That is reflected in electricity prices at Haywards, in Wellington, at the end of the high-voltage direct current link through the Cook Strait cable.

On Saturday, the daily average reference price for electricity at Haywards was 1.76c/kWh, and on Sunday it was 4c/kWh.

That compares with 26.59c/kWh on the corresponding Saturday last year and 30.37c/kWh on the corresponding Sunday, when lake levels were low.

At Benmore, on Saturday and Sunday, the price was listed at 0c/kWh.

Yesterday, one spot listing was still well below 1c at 0.0076c/kWh.