Published in the National Business Review of 8 February 2008

This is a tale of warm air, hot water, no wind, resource consents, and inter-company rivalry and co-operation arising from recent incidents of grid emergencies in the electricity system.

There was a three and half hour "grid emergency" on Monday night where Transpower asked major users to cut usage and for generators to increase supply.

This follows four other grid emergencies in December, three in the Upper South Island due to "insufficient generation and reserves" and a fourth involving a loss of supply on the West Coast according to incident reports from Transpower filed with the Electricity Commission.

All three Upper South Island incidents required demand management from Transpower.

A combination of low lakes levels in the South Island, no wind in the Tararuas, the closure of Contact's New Plymouth plant, scheduled maintenance at its Stratford plant and the loss of some transmission capacity from the South Island to the North Island means both generation and transmission are operated within tight margins.

Low lake levels in the South Island are not unusual at this time of the year, and the normal response would be to run the coal and gas fired power station at Huntly to allow lake levels to build up water for the winter.

But the summer temperatures have made the air around Huntly warmer than usual which has also raised the temperature of the Waikato River. This has limited the amount of electricity that Genesis Energy can generate from Huntly because running Huntly means discharging hot water into the Waikato River.

The warmer the river water is before the discharge, the less hot water Genesis can put in without violating its resource consent. One solution is to put cold water into the river to lower the temperature.

There's plenty of cold water in Lake Taupo, but the power stations on the Waikato River are owned by Mighty River Power.

That company's Mighty River's resource consents require it to maintain the level of Lake Taupo within a margin of 1.4m and also controls how much water it can send down the Waikato River.

It may be sensible for the rival generation companies to co-operate in the national interest but competition issues are a barrier.

So we may now have the interesting situation, where Mighty River Power is letting more cold water out of Lake Taupo to cool the Waikato river so that rival generator, Genesis, can generate more electricity, which then allows Meridian, yet another state owned generator, to build up the South Island lake levels so it can sell more electricity in the winter time.

Back in the days of ECNZ, all these issues were managed within a centralised control system.

One final point; it's hard to get a change to a resource consent quickly.

The Resource Management Act envisages emergencies as local disaster situations and it doesn't cover electricity shortages. If power blackouts were imminent, variations to resource consents - such as changing the allowable lake levels or the temperature in the Waikato River - would have to follow the normal statutory processes.

One alternative would be special empowering legislation rushed through Parliament overriding all parties' rights in the national interest. Perhaps not before lunchtime in an election year!

John Bishop was previously Corporate Relations Manager for the former Electricity Corporation of New Zealand Ltd.