$60 million (make that $180 million) ripoff
Contact Energy and Meridian Energy have been accused of extracting more than $60 million from consumers by over-charging for their electricity while spilling water from their South Island dams.
Overall, including all other generators, this has lead to a nationwide $100 million wholesale ripoff in just 4 weeks.
Haast Energy Trading, Ecotricity, Electric Kiwi, Flick Energy, Oji Fibre, Pulse Energy Alliance and Vocus have claimed that an Undesirable Trading Situation (UTS) began on 10 November 2019 and was continuing as at 12 December 2019. The complaint alleges the Meridian and Contact have breached the good conduct provisions of the industry’s code by manipulating their offers to hold prices higher than they would be, given the volume of water being spilled in recent weeks.
Independent retailers believe the situation has created an undesirable trading situation – a UTS – and has asked the Electricity Authority to reset wholesale power prices since Nov. 10 based on an offer price at Meridian’s Manapouri dam of $5 a megawatt-hour and the same figure at Contact’s Clyde and Roxburgh dams.
“Despite all the rain, we’re seeing generators controlling hydro storage in a way that both pushes up wholesale prices and results in a huge and unnecessary increase in carbon emissions while water is being wasted” says group spokesperson and Electric Kiwi CEO, Luke Blincoe.
“we’re seeing a lot of spill at the moment and a number of hydro generators are choosing to operate below capacity despite the abundance of water. We’re seeing water spilling at the same time we are also seeing fossil fuels burned for no good reason.”
Energy Minister Woods steps in
We absolutely support the actions of Minister Woods in trying get a get a better deal on electricity for Kiwis and Kiwi businesses.
Her recent comment has had the desired result in trimming Meridian and Contacts wings; “I think it’s good that the EA is looking closely at this claim – it would be very concerning to me if ‘gentailers’ were looking to game the wholesale market by spilling when they don’t need to.
Since her comment the wholesale offers on hydro appear to have dropped close to zero ….. where they should be when we’re spilling water!!
Massive Carbon Emission Increase
Meridian and Contact opted to run Coal and gas that’s lifted wholesale spot prices and released further carbon emissions, undermining NZ’s goal to reach carbon neutrality.
6,000,000 million Kgs of CO2e of carbon has also been emitted due to Meridian and Contact actions.
Meanwhile, Haast says, the flow in the Clutha River downstream of the Clyde Dam – where Contact operates one of its two Clutha catchment power stations – has averaged over 900 cubic metres per second.
But generation from Clutha from 11 November to 9 December averaged about 600 MW against the scheme’s total capacity of 784 MW “and often dropped nearer to 300 MW overnight”.
“Contact has repeatedly offered zero-value water into the market at prices greater than $50 to prop up spot prices, intentionally spilling more water than necessary.”
Haast says the impact of Contact and Meridian’s trading activity has included:
- higher than otherwise wholesale electricity prices;
- additional and unnecessary water spill; and
- inefficient and higher use of North Island hydro in off-peak hours.
Haast says its simulations show 15 GWh of North Island water was used “needlessly” and could have been supplanted by spilled South Island water.
Here is a copy of the report: https://www.ea.govt.nz/code-and-compliance/uts/undesirable-trading-situations-decisions/10-november-2019
and a copy of the article can be found here: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12294391