NZ:More power tariff options as new meters introduced

Heavy rain has filled South Island hydro lakes to capacity, forcing power companies to spill excess water and driving down electricity spot prices to the benefit of some big commercial customers who buy their power on the wholesale market.

But residential customers are not expected to enjoy similar relief.

Electricity Commission chairman David Caygill said the power companies had a fair point when they said that in the middle of last winter when lake levels were low and spot prices much higher, they did not immediately increase their prices to retail customers.

Any large businesses paying wholesale prices did see a price rise then, leading many of them to cut back usage, he said.

That was an advantage during the winter to retail customers, but now they might feel they would be better off with more flexible prices.

"On the other hand, we'd soon want more certainty and less flexibility the next time there's a shortage. Obviously, we can't have it both ways," Caygill said.

Longer term a "very important" development was the introduction of modern metering systems which would enable retail companies to introduce more flexible tariffs.

Such tariffs were likely sometime in the next five years, and he expected a range of options to become available.

"When that happens those who want to will be able to buy electricity on a more flexible basis which sees the price probably go up and down in the course of a year.

"Or maybe they would have a tariff which goes up and down in the course of a day," he said.

"The real reason why this matters is because it would encourage more customers to use electricity more efficiently."

But coincidentally, when and if it happened, the amount customers on flexible tariffs ended up paying could reflect circumstances such as lake levels.

The level the lakes were at now put the country in a better position than normal for this time of year, Caygill said.

But it did not guarantee a problem-free winter, as the storage lakes when full had enough water for three months' supply of electricity.