Meridian Energy pushed up power prices by unnecessary spilling water from its south dams in December that could have been used for generation, the Electricity Authority has ruled in a preliminary decision.
The authority said the "undesirable trading situation" (UTS) could have resulted in other electricity retailers having to pay an extra $80 million for power on the wholesale market, though the final cost could not yet be determined.
"Meridian's activities led to more expensive generation running in the North Island at a time when there was excess fuel in the south," Electricity Authority chief executive James Stevenson-Wallace said.
...and that "more expensive generation" was gas and coal. Running the maths, an estimated 41 GWh of electricity means somewhere between 8 and 13 kilotonnes of extra carbon dioxide spewed into the atmosphere, in just one month. This isn't just a financial crime - its an environmental one as well.
New Zealand electricity companies have a logn history of pulling these sorts of scams. Back in 2011, it was Genesis doing it, and Meridian was the victim. They did it back in the 90's too. And the reason they do it is because in our electricity market, the marginal generator sets the price, so even if Genesis was providing the electricity, Meridian was benefiting from the higher prices. As for how to stop it, sticking sociopathic business managers in jail seems like a reasonable if short-term solution. In the long-term, we need market reform, or better yet, to eliminate the market entirely. A state-run electricity system with the primary goal of providing power rather than profit will simply not be incentivised to pull such scams. And we'll all be better off as a result.