July 28 – Infratil Ltd.-controlled power company TrustPower Ltd. says the recent trend of low wholesale electricity prices is coming to an end and rising prices will support new renewable generation projects.
In a speech to the company’s annual meeting, chief executive Vince Hawksworth stopped short of predicting higher retail electricity prices, but dwelt on the unsustainability of commercial behavior of its state-owned competitors.
Carbon pricing would also underpin higher power prices, with the Australian government’s carbon pricing plans giving further support to carbon prices on electricity generated by gas and coal-fired plants in New Zealand.
“The recent pause in rising wholesale prices is a natural outcome of the recent period of low growth and also the Christchurch earthquake – we have had new generation projects come on with no load growth,” said Hawksworth. “With the economy now starting to recover we expect to see the current surplus absorbed and also to see wholesale prices come back into alignment with the need for investment in new plant.”
However, he feared poor capital allocation by SOEs could hamper private investors’ intentions to build new generation, and gave strong support for the government’s plans to partially privatise SOE generator-retailers, if re-elected.
Recent competition for retail customers meant the industry was now “one step away” from having “the lowest possible sustainable cost structures in the industry and that efficient and competitive prices are available for consumers,” said Hawksworth. “The main missing step is capital efficiency.
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