Ruralco Energy general manager Tracey Gordon is dealing almost daily with co-operative farmer shareholders seeking advice as their electricity contracts come to an end and new ones are being set.
While electricity companies are renegotiating contracts with existing customers, those seeking new supply arrangements might find it more difficult to get on board.
A big irrigator further south had been unable to secure supply, she said.
“This is something we may have hardly ever seen before, maybe only very early on when the electricity market was developing.
“It is not a pretty market to be in at the moment.”
There is a risk those unable to secure new contracts could be pushed into the spot market, enduring the spikes and volatility that goes with that.
Prices of about 50c a kilowatt hour are being bandied about compared to typical contract rates of 7-8c/kWh.
Issues around both supply and demand are putting pressure on electricity generators who also have one eye on medium-term prospects that might push tight supply issues to the end of the year.
Exit points around the country where electricity flows from the grid to be distributed through retailers have recorded spot market prices between $800 and $987 a megawatt hour, more than 10 times higher than same time a year ago.
On the supply side one of the greatest concerns is the hydro lake levels in the South Island. Hydro supply accounts for 57% of NZ’s total generation capacity.
Meridian, responsible for 50% of NZ’s hydro storage, reported after the first week in October national hydro storage had plummeted from 94% to 79% of the historical average, with the big South Island catchment dragging that down with its 75% of average.
Meantime, Genesis’s September water inflows to its large hydro schemes are less than half the average.
So far October is not looking any more optimistic for rainfall input, with most lake regions recording significantly less rain than average.
One upside is snow levels in the Southern Lakes region are about average for this time of year, delivering a reasonable level of melt water compared to the very low levels experienced last year.
However, high temperatures are hastening the departure of that stored supply.
Weather Watch director and Farmers Weekly commentator Philip Duncan had some good news for hydro catchments.
His forecasts predict more than 100mm will fall in major hydro catchments by early November, with some extending to the Canterbury region.
“It is not a huge amount but it will be welcome coming after a dry September-October period.”
Electricity from gas-powered stations also remains perilously tight with Genesis reporting coal imports from Australia to power the Huntly thermal station.
Normally gas driven, that station has been hit by a gas shortage caused by an outage on Taranaki’s offshore Pohukura platform.
Another large gas turbine plant at Huntly is also only on half capacity because of that gas shortage.
Shell has told the market the pipeline issue means the field is likely to remain out of action until late November, increasing the likelihood high prices will continue till then.
Gordon believes a combination of both a wet weather pattern and greater certainty about the gas supply are needed before more confidence is restored to the market.
And demand is also strong.
“We are seeing significant increases in electricity demand for irrigation, with many farmers already having been irrigating for a month.
“Temperatures have been very warm and irrigation has been starting far earlier than usual.”
