Wellington, April 30 NZPA - Wholesale electricity prices in New Zealand have fallen significantly and should remain low for the rest of the year, said Fitch Ratings, a credit rating company.

"The first quarter in 2009 has seen a significant drop in New Zealand wholesale electricity prices, compared with the first quarter in 2008," said Gavin Madson, director with Fitch's Asia Pacific Energy and Utilities team.

Dam storage levels were now around 120 percent of the average levels, and this was before key inflow periods in the winter for North Island dams and spring for South Island dams.

"Fitch expects downward pressure to remain on wholesale prices for the rest of the year."

Also, demand for electricity is reducing as the economy slows, which will also influence the wholesale electricity price this year.

In 2008, electricity market prices were significantly above average, due to low dam levels causing more generation to be sourced from more expensive thermal plants.

New Zealand's electricity system is dominated by hydro generation so wholesale prices increase in a dry years.

Transmission constraints, particularly between the North and South Islands, were also a key risk for the electricity market.

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