Power-saving campaign nears as station fails

One of the country's biggest gas-fired power stations has failed just days before electricity companies are expected to call a nationwide energy savings campaign because of the drought in the South Island.

On Wednesday night Contact Energy took its Otahuhu B gas-fired power station near Auckland offline to repair a fault, which may take four days. The 10-year-old station has a capacity of 400 megawatts.

National hydro lake storage is down to 53 per cent of average and is likely to fall further because Otahuhu is out of action. Low lake levels have driven wholesale electricity prices to record levels.

Big power company bosses are due to meet on Monday to decide if a public power savings campaign should start, possibly by the middle of the month. Without significant rain, it is possible "ripple control" hot water heating may be cut back by early July, sources said.

National's energy spokesman Gerry Brownlee said Otahuhu's failure should be the cue for Energy Minister David Parker to announce "the crisis measures he's been trying so hard to avoid".

The southern hydro lakes would be using water that would otherwise be held in reserve for winter.

"The situation is remarkably bad. Just to keep the lights on, New Zealanders are relying on a broken Cook Strait cable, an asbestos-riddled mothballed plant in New Plymouth, and a diesel-guzzling emergency generator at Whirinaki."

Contact is having to buy high-priced power from other generators on the wholesale market to meet the needs of its customers.

Contact chief executive David Baldwin said that could cost the company "millions" over the four days. Contact shares lost 14 cents to $8.91 yesterday.

The timing was "unfortunate" given the low lake levels, but Contact needed to fix the fault now.

"At this point, we believe we are on track to bring it back late Sunday," Mr Baldwin said.

"It could happen again, yes, it is possible, but do we expect it? No."

There was no risk of blackouts in Auckland if Otahuhu remained out of action.

On the positive side, Contact said one 100-megawatt unit at the New Plymouth power station was restarted on Wednesday, ahead of schedule, and was running at full load.

The executive director of the Major Electricity Users Group, Ralph Matthes, said Otahuhu being out of action was a "blip in the wrong direction" and it would be difficult to meet winter peak demand from households.

"It will drain down another big slug of power out of the South Island lakes storage," he said.

Independent energy expert Bryan Leyland said Otahuhu was bought for the "lowest possible cost" in the late 1990s and the boiler had given a lot of trouble initially. Its transformer failed in mid-2000 and it was out of action for about six months.

Mr Baldwin said Otahuhu had been "running pretty well" in recent years. It was due for an overhaul later this year to bring it up to "current standards", but Otahuhu was a "good plant" and Contact would build something similar if it had to.

- © Fairfax NZ News