How safe is NZ's power supply? 

The two hour blackout that cut power to 130,000 homes across North Canterbury, Nelson, Marlborough and Buller on Friday, highlights just how reliant New Zealand is on electricity - but just how safe is our supply.
 
The government is trying to figure out how to keep the lights on while keeping the lid on rising power prices.

At the heart of New Zealand electricity generation are the hydro lakes and dams, which produce 60% of our electricity needs.

But low rainfall and recent dry spells have put pressure on the network and the heat on generation.

"The hydro system is a great system, but we do have to live with the risk that some day may be short because of a very dry year," Electricity Commissioner Roy Hemmingway says.

The outgoing commissioner says demand for power is rising at a rate of 2% a year, which is pushing prices up and is the same amount consumed by Hamilton or Dunedin.

"I think that it is going to be hard to get lower power prices and maintain a first world electricity system.  All new power sources are more expensive than old ones and that means as new power generation sources are added to the system we will see prices going up.  It is in everybody's interest that we keep our demand growth as low as possible," Hemmingway says.

But some say the critical issues of a reliable power supply and rising prices are not being addressed.

"That's what the market reforms did promise - lower cost electricity because of competition and less money wasted on the system," John Walley, president of the Canterbury Manufacturers' Association says.

That is not how Hemmingway sees it.

"If we don't have sufficient high prices in the market then we won't have incentive for generating companies to build.  It's that simple."

Genisis Energy's new gas fired power station at Huntly will hold the key to a reliable supply for the next four to five years.

It is expected to generate 385 megawatts, which is enough electricity for nearly 400,000 households.

Meridian is also looking at other sources of generation.

"Meridian has a number of plans underway right now that would give us several hundred megawatts of new power - mainly wind, and we think that will increase the margins quite significantly," spokesperson Alan Seay says.

And with Hemmingway set to leave his post in November, it will now be up to the generators, lines companies and electricity retailers to work together to guarantee future supply at an affordable price.