18 Feb 2010

Big spike in prices after power cable shut down

10:58 pm on 18 February 2010

Provisional electricity prices in the North Island spiked as high as $85,000 for one megawatt hour on Thursday after a fire forced the shut-down of the inter-island power cable.

The Cook Strait cable link was restored after five hours and the New Zealand Stock Exchange says the real prices will bear no relation to what users actually pay.

National grid operator Transpower says the cable had to be switched off for safety reasons while the fire blazed under a transmission line in the Marlborough Sounds.

The provisional spot price for power in the North Island jumped from $91.53 for 1 megawatt hour to nearly $85,921 within five minutes.

However, a spokesperson for the New Zealand Stock Exchange, Ashley Milkop, says no one will actually pay that much for power.

Mr Milkop says the very high spikes during the five-hour shutdown were caused by data overload and were not an accurate forecast.

Fires flare up

The fire broke out about 11.30am and the 610km transmission line connecting the Benmore dam in the South Island and Haywards in North Island was shut down.

Seven fire appliances and two helicopters were needed to control the 20-hectare blaze in Ocean Bay in Port Underwood, which had threatened nearby homes.

Fire crews were forced to return to the scene on Thursday night after residents reported seeing flames.

A local told Radio New Zealand that he saw fresh hotspots flaring up and flames which could have been 10 metres high.

The Southern Fire Communications centre says crews have been dampening down a couple of small hotspots late on Thursday, which did not pose a risk to the Cook Strait cable.