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The Electricity Authority has confirmed an undesirable business situation (UTS) that occurred last December during extreme rains on the South Island, which saw lake levels above the maximum.
There was a surplus of supply, but wholesale electricity prices did not decline and remained high for an extended period.
The power market watchdog said the shares of power companies Contact, Meridian and Genesis contributed to the situation, along with other factors that resulted in a lack of competition and an excess of water spillage.
“Having considered all the evidence, the Authority has decided that the situation was such that confidence in the wholesale market was, or could have been, threatened,” it said in a final decision document published today.
The claim for a UTS was made on December 12 of last year by Haast Energy Trading, Ecotricity, Electric Kiwi, Flick Electric, Oji Fiber, Pulse Energy Alliance and Vocus.
Flick Electric CEO Steve O’Connor said in a statement that the decision is good news for consumers.
“It’s a relief to see that the watchdog is on its way to holding Meridian accountable. They should have been generating electricity when water was plentiful.
“Instead, we believe that they have been using their government-owned assets to raise wholesale prices and maximize profits,” he said.
The authority is expected to publish a draft document on the actions to correct the UTS event in February next year for your consultation.
Separately, the Electricity Authority is investigating whether Contact and Meridian’s behavior violated the High Standard of Business Conduct after allegations were made in the 2019 claim.
O’Connor of Flick Electric said the watchdog needed to issue a “hard penalty” to Meridian.
“Meridian needs more than a slap on the wrist with a wet bus ticket … otherwise there is no real disincentive to prevent them from abusing market power,” he said in a statement.
The investigation is expected to be completed early next year.
“When we looked back at the event, we realized that we spilled a little more water than necessary, even though we generated at record levels and most of the spill was completely unavoidable. We have certainly learned from this event,” he said Meridian Energy. 1 NEWS.
“While we could have done better, we still do not believe this event has stood the test of an undesirable business situation.
“The EA has made it clear that the situation was the result of the collective impact of a number of factors, some that were under Meridian’s control, but others that were characteristic of what was happening in the broader market and weather conditions. truly exceptional. It is to the satisfaction of EA that it has said that it does not seek to blame either party in this process. “
