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NZ Not Alone In Energy Supply Concerns

June 30, 2004

NZ’s electricity supply worries are being echoed around the world, highlighting a lack of clarity internationally on who is responsible for securing electricity supply. A report by business consultancy Cap Gemini shows concern about how deregulation is working and whether, in its current form, it will deliver the kind of security required to support economic and social growth.

The report is based on interviews with 130 senior utilities executives worldwide, including representatives of all of NZ’s major gas and electricity companies. Cap Gemini’s NZ Associate Director of Energy and Utilities, John Hancock, says electricity blackouts in London, Italy and New York in the last northern summer are reflected in the survey respondents uncertainty about how electricity markets will work to ensure sufficient supply and reliable delivery of power.

NZ and Germany are the only countries to have set up a system where the industry regulates itself. In both countries this has failed, with the need to appoint a new regulator - in our case the new Electricity Commissioner.

Despite the establishment of the Electricity Commission and a major programme of work covering wholesale and retail electricity market design, transmission investment and pricing, common quality and security of supply, there’s still major concern among NZ energy executives about the impact of regulation on the investment environment.

Hancock adds NZ executives feel a growing need for pragmatism. After being the world’s “poster girl” for reform in the energy sector, with a sophisticated market, NZ is now coming back into “the mainstream.” 

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