Generation - 11 April 2003 Print

The Auckland Energy Consumer Trust could invest in the electricity generation industry to avert a looming power crisis - but not unless the law changes.

Many community-owned trusts like the AECT are willing to assist the industry by investing in generation, but until there is a clear and cohesive approach to regulation of the industry this will not happen, said Karen Sherry, chair of the AECT.

"The electricity industry needs to be reviewed to ensure there are incentives to enable investment in electricity transmission, and to guarantee much-needed generation facilities are built. It's a gloomy outlook unless this happens," Ms Sherry said.

Current legislation restricts lines companies from also investing in generation, but the investments could be partitioned, she said.

"Lines companies can transparently separate their monopoly business from contestable operations to eliminate any cross subsidisation, therefore freeing the community-owned trusts to invest in other parts of the sector."

"Our industry has struggled with constant change for several years and this is adversely affecting the long-term security of power supply. "

As it stands, the energy industry framework does not encourage new capital investment for both generation and transmission, and profits are maximised by maintaining electricity in short supply.

"The way forward is to increase competition, improve the electricity system through distributed generation and ensure the industry can manage the economy's exposure to dry year risks."

Ms Sherry noted the AECT has investments of $3.1 billion and is keen to help bring about change to stabalise the industry.