Investigation into large electricity company highlights 'bigger problem in the market', Flick Electric CEO says

The chief executive of power company Flick Electric says the Electricity Authority should take a wider look at the market following an investigation into Meridian Energy, which was accused of spilling water from hydro stations unnecessarily, causing prices to rise.

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Steven O'Connor explained how Meridian Energy, which is accused of spilling water from its hyrdo stations, impacted Kiwi consumer's pockets. Source: Breakfast

The Authority released a preliminary report this week into what's known as an Undesirable Trading Situation and found events in December last year may have led to just that.

In early December, Meridian Energy – which is 51 per cent owned by the Government – and Contact Energy were accused of spilling water from their hydro stations in the South Island.

The complaint against Meridian was upheld.

Meridian Energy has told the NZX it was responding to an exceptional weather event at the time. It will now make a submission to the Electricity Authority as part of its consultation process.

The complaint against Contact Energy was not upheld.

"At the time there was more water than we could use for generation, given the Clutha River was in significant flood," Conctact Energy's chief generation and development officer James Kilty told 1 NEWS on Tuesday.

"Our focus in extreme flood events is always to operate the Clutha system to ensure the safety of communities downstream, our people and assets, and to manage our resource consent obligations."

Contact will also be engaging with the Electricity Authority's consultation period, Mr Kilty says.

A number of small companies say the spills led to electricity prices in the North Island to rise.

The incident came at a time of heavy rain and flooding, and the companies were required to manage water flows.

Big power company accused of anti-competitive behaviour, causing prices to rise

Steven O'Connor, the chief executive of Flick Electric - one of the companies which complained - told TVNZ1's Breakfast this morning the spillover was enough to power 150,000 Kiwi homes, and equated to about $80 million in extra electricity charges.

"We think the Electricity Authority's got an important role there. I think this circumstance is probably really just a symptom that the market isn't working as well as it should," he said.

Mr O'Connor said there were five big power companies in New Zealand and they hold a lot of power in the sector.

"We think it's a really good opportunity for the Electricity Authority to take a hard look at the market and make sure it's working well.

"It's really important from our perspective that we have healthy competition in New Zealand, and that's the independent retailers that are offering that healthy competition, and if we're unable to buy energy at reasonable rates that means we're unable to ensure that prices remain low for Kiwis.

"So we think the Electricity Authority's done a really great job in reviewing this particular circumstance but that's probably really just a symptom of a bigger problem in the market place.

"Higher wholesale prices, that ultimately means higher prices for Kiwis and these days affordability is a massive thing for consumers so that's what our first thought is, if prices are inappropriately elevated in the wholesale market that puts pressure on prices for consumers.

"Everyone's struggling to pay bills these days, you know, we have a lot of energy poverty in New Zealand - so it's estimated we have more than 100,000 Kiwi homes where paying their power bill is more than 10 per cent of their income in expenditure - and so we just think it's bad from that perspective.

"The other challenge we have is that's the market independent retailers like Flick buy our electricity so we need to know that the market's providing fair prices that are reasonable as well."