Power generation affected by dry conditions

Dry conditions in Southland mean lakes Te Anau and Manapouri meet the criteria for low-range electricity generation — directly affecting operations at Tiwai’s aluminium smelter.

In the remainder of the South, generation remains stable but Transpower, which is responsible for electric power transmission in New Zealand, is monitoring the situation.

The two main hydro lakes in Southland are in the worst position of all hydro lakes in terms of storage with others in "reasonable shape".

Meridian Energy put New Zealand Aluminium Smelters Limited (NZAS) on notice on April 2.

In a statement issued on Wednesday, Meridian chief executive Neal Barclay said the energy generator and retailer had nominated trading periods, termed "Meridian price separation periods" following the terms of its electricity agreement with NZAS.

That created a price separation between Tiwai and Benmore spot prices as a result of the exceptionally dry conditions across Southland.

Under the agreement with NZAS, Meridian could nominate a price separation period when the Benmore spot price was less than 85% of the Tiwai spot price in the same period.

Mr Barclay said it was the first time under the agreement Meridian had nominated trading periods and if current conditions persisted, further periods could be nominated.

The Waiau catchment experienced its lowest inflows on record for the January to March period and limited generation at Manapouri.

The same generation woes were not being experienced in Otago.

Meridian’s Aviemore and Benmore hydro-electric power stations with lakes Tekapo and Pukaki continuing to prop up national storage at 67% and 80% full respectively.

Contact Energy generation at the Clyde and Roxburgh dams was also unaffected.

At the time Meridian reduced supply to NZAS, Transpower data showed national hydro storage falling from 73% of full to 67% of full — or 85% of average for the time of year.

Transpower acting general manager operations Matthew Copland said the low inflows into southern lakes were a characteristic of La Nina weather conditions.

There was presently no overall risk to nationwide security of supply.

Electricity prices were determined by the electricity market, he said.

"When you look at historical trends, often when lake levels decrease prices can rise as the mix of generation shifts to include more expensive energy sources like gas and coal."

jared.morgan@odt.co.nz

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