The blame-game over the Monday night power blackout has deepened.
Ministers initially talked of “market failure” – National accused the government of being asleep at the wheel
Then ACT said the government’s energy policy was “flawed” because it puts carbon emissions ahead of affordable and secure electricity, through the ban on natural gas exploration.
The Green Party, for its part, contends the “gentailers” are more focused on chasing profits than providing more affordable, more renewable, and more secure electricity generation.
Meanwhile two small players in the electricity market have made a formal complaint to the Electricity Authority following Monday’s rolling blackouts.
Retailer Electric Kiwi and wholesale energy trading firm Haast Energy Trading are accusing large gentailers of abusing their market power by withholding generation capacity.
They say there was an ‘Undesirable Trading Situation’ (UTS) on Monday night when around 20,000 homes had their power cut.
Kiwi and Haast Energy Trading allege Genesis and Contact caused this UTS and breached trading conduct rules in the Electric Electricity Participation Code.
Haast Energy Trading managing director Phillip Anderson didn’t buy Genesis CEO Marc England’s line that the blackouts saw Genesis lose money.
He said that looking beyond Monday night, less generation capacity creates scarcity, which ultimately makes wholesale electricity more expensive. What’s more, outages see a risk premium built into the price.
Haast Energy Trading and Electric Kiwi ultimately want the electricity generators to be broken up and the market to be structurally reformed.
In direct response to their formal complaint, they want the Electricity Authority to ensure the wholesale electricity price for Monday night is reset to assume the generation they accuse Genesis and Contact of withholding was offered to the market. This, they believe, would prevent generators from being rewarded for withholding capacity.
In Parliament Environment Minister David Parker (standing in for the absent Energy Minister Megan Woods) said he “absolutely agreed” the issue ought to be inquired into properly. He insists the blackout ought not to have occurred.
It is “unacceptable”, he said. Two inquiries would seek to “get to the bottom of what’s gone wrong here”.
Infrastructure Minister Grant Robertson asserted ministers were “not happy” with the lack of communication from Transpower.
The issue for Robertson, however, is what to do in the face of market failure. He is convinced the market-based system put in place by the National Party shouldn’t be allowed to run rampant.
As the National Opposition saw things, it wasn’t hard to find the culprit for the Monday night blackout. Gerry Brownlee summed it up:
“The minister ( of Energy) has the responsibility for security of supply, the minister has responsibility for the direction of investment that occurs in the electricity sector, and the minister overall has a responsibility for the consumers who expect the system to always keep them supplied with electricity”.
Brownlee found it hard to believe a minister’s office stocked full of advisers could be so far off the ball, as was on Monday.
He rubbed the open wound even harder:
“It is ironic on the day that the Intergovernmental Panel on Climate Change comes out with new predictions about global temperature rising due to carbon emissions, this government has an electricity shortage entirely due to the fact we are so dependent on fossil fuels to keep the system alive”.
In the NZ Herald, one of the country’s most respected commentators, Brian Fallow, labelled it “scandalous” that power was abruptly cut off .
He notes Genesis has said in a submission to the Climate Change Commission that in a typical winter NZ needs 2000GWh more stored energy than our hydro lakes can provide and in dry years an additional 5000GWh or more can be needed.
“Thermal plant at Huntly power station fills most of that storage gap today and we expect it will meet the entire gap within the next few years,” it said.
Fallow adds a “translation”: forget about banning coal if you want the lights kept on.
So what the whole shemozzle over the power blackout throws into stark relief is this: NZ has to stop emitting greenhouse gases, but how does it do this while keeping the lights on?
New Zealanders will be unforgiving if they find the energy they depend on – besides being affordable and sustainable – is not reliable.
Point of Order 
Electric Kiwi make a lot of noise but they have a parasitic business model and got caught out big time. Why don’t they have their own generation or hedges? And note they didn’t say what generation was withheld. That’s because there wasn’t any available at short notice. There is a lot of ongoing maintenance with machines dismantled or waiting for parts.. That is why some MW were down on station rating, but everything that could be on, was on, or was held back as reserves in the South Island on Transpower’s instruction.
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We want electricity that’s cheap, reliable and green, but if we’re going to rule out nuclear power then we cannot have all three; we have to pick two.
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