Hydro storage was being managed far more conservatively than in 2008, an encouraging sign that the changes resulting from the 2009 ministerial review have been positive, Electricity Authority head Carl Hansen says.
Hedge and spot prices reflected the hydrological situation, which meant the market received useful price signals of the near-term supply risks arising from the low hydro inflows.
Prices for the longer-dated futures remained almost unchanged from November 2011 until the middle of 2012, showing that hydro events in any one year were not expected to affect supply and demand conditions in future years, Mr Hansen said in a review of the 2012 electricity market.
''The hydro management in 2012 augurs well for future hydro management.''
The 2012 year had the driest first six months recorded but the market responded in ways that were encouraging, he said.
Generators invested in new equipment to increase the amount of reserves offered in the South Island and acquired the offer rights for interruptible load from the Tiwai Point aluminium smelter.
That increase in reserves was needed in a dry year to support southward flow through the Cook Strait cable. The review outlined how that resulted in earlier flows south than in the previous dry year of 2008, which had the effect of conserving water in the South Island. Also, in future years, the risk of supply shortages should be greatly reduced now that Meridian had access to an additional 5m in Lake Pukaki when official conservation campaigns were undertaken, Mr Hansen said.
In other developments, evidence of increased retail competition included measures of market concentration and switching. The review showed the overall level of competition in the retail market was one of reducing regional market concentrations with some new independent retail entry and growth slowing reducing the market shares of the main retailers.
Nationally, switching levels stayed strong in 2012, with 18% of customers changing their retailers, Mr Hansen said. That was slightly down on record levels of 19.5% in 2011, but still very high, indicating customers were exerting pressure on retailers by voting with their feet.
