Enquiry into increased market prices from 27 February 2013

Surplus hydro storage in the South Island in January 2013 was followed by an extended period of very low inflows in both islands.

In this section:

Stage: 1 (Enquiry)

Status: Complete

Date commenced: 4 March 2013

By the end of February 2013 national hydro storage had dropped significantly and was still declining.

On 27 February 2013, wholesale electricity prices on the spot market increased rapidly across the country. Spot prices remained elevated until 14 March 2013, at which time they began to recede. The electricity futures price also showed a sharp increase from 1 March 2013.

A number of specific issues were addressed by the enquiry, including increased offer prices at Huntly, differences between indicative spot prices and final prices, increased price volatility associated with HVDC pole 3 testing, reduced availability of real-time pricing indicators, and Manapouri generation levels and spill during January 2013.

We concluded that while overall the prices and response were as would be expected from the market, a number of specific issues were observed that affected the operation of the market. The majority of these issues are currently being considered as part of projects already underway within the Authority. Where this is not the case, the Authority has recommended potential ways forward. These will be progressed further within the relevant Authority workstreams.