Govt policy is to blame

The Herald reports:

Energy Minister Megan Woods is seeking advice about whether wholesale electricity prices are too high, with analysts warning current pricing risks political intervention.

It is the political intervention that has caused the spike in prices. More intervention is the problem, not the solution.

Woods acknowledged that low inflows to New Zealand’s hydro catchments, coupled with a shortage of gas supplies, meant prices were likely to be above average.

And which Minister has banned offshore gas exploration?

This was being reflected in both wholesale spot prices and near term futures prices, currently above $230 per megawatt hour, more than double the long term average.

The futures prices is significant. This is the market saying we have a supply problem. The problem is government policy with its ban on gas exploration and also the insistence that any future projects must be 100% renewable.

So yes retail electricity prices will start rising in the next 12 months. And they will not be small increases. And they will be as a result of the Government.