1. The news that mattered this morning

In the news this morning, Transpower has warned New Zealand could not cope with winter electricity shortages if it moved to 100 percent renewable power, Fonterra increased its milk price forecasts and the Ministry of Health has a new boss. Also, the EU agreed to start free trade talks with New Zealand and Australia. See more on that below from Newsroom's Sam Sachdeva.

Our achilles heel - Transpower released a report this morning predicting power shortages during winters when there is not enough water, wind or sun. It argued this remained the Achilles heel in New Zealand's otherwise huge potential to move most of its fossil fuel-driven economy to renewable electricity. Entitled Te Mauri Hiko, the report suggests fast-starting power stations using natural gas should not be closed "without an energy storage solution" under scenarios that show the gap between supply and demand during winter is likely to balloon as the electricity system moves towards 100 percent renewable generation. See Pattrick Smellie's full report on Te Mauri Hiko here on Newsroom Pro.

Price hike - Fonterra raised its forecast farm gate milk price for the 2018 and 2019 seasons, while cutting its projected dividends for 2018, saying rising global dairy prices were squeezing margins. It raised its forecast milk price for the current season by 20 cents to $6.75 per kilogram of milk solids and gave an opening price forecast for 2019 of $7/kgMS, saying global demand for dairy products "is expected to remain strong," especially in China and for butter and anhydrous milk fat in particular. See more detail in Jonathan Underhill's report here on Newsroom Pro.

Frying pan to fire - The State Services Commission announced the appointment of current Capital and Coast District Health Board CEO Ashley Bloomfield as the new Director General of Health for a five year term from June 11. Health Minister David Clark welcomed the appointment of Bloomfield, who trained as a doctor and has since moved into primary care and health management. He replaces Chai Chuah, who resigned two years before the end of his five year term after criticism of his management by Clark and others.