This morning the Finance and Expenditure Select Committee heard submissions on the Electricity Industry Bill, the National Party’s latest attempt to create more competition in the electricity market (because their earlier attempts were so successful…). Gerry Brownlee seems to be picking up where Max Bradford left off, breaking up the Electricity Commission, re-organising the assets of the electricity generators and allowing lines companies to retail electricity as well as supply it. Quite a few submitters thought the reforms would lead to higher, not lower power prices.
A very good submission from the Institute of Professional Engineers highlighted the folly of taking the Tekapo A and B generators away from Meridian and giving them to Genesis. They argued compellingly that the Waitaki hydro system functions as a coherent system and that removing the two generators at the top end could lead to less efficient use of water. Others also argued that splitting it up could lead to Genesis spilling water in order to maximise prices. So far there doesn’t seem to have been any compelling argument put forward to justify why the potential (minimal) gains in terms of competition offset these considerable risks.
The bulk of submitters argued that the timeframe for the asset reorganisation was too rushed (including privatised Contact Energy). Federated Farmers argued that if the Commerce Commission is to be tasked with approving Transpower grid upgrades they should also have to consider the alternatives of more localised generation. The Electricity Commission currently does that, but under the Bill they’d lose that function to the Commerce Commission. Fed Farmers were also concerned about the “downstream impact” of having competing operators on the Waitaki system.
A very good individual submission by industry expert David Close highlighted how the introduction of retail competition in the mid-1990s has been followed by a fall in commercial electricity prices, a significant increase in residential electricity prices, while prices for industrial users have remained reasonably stable.
Overall my impression so far is that the Bill lacks coherence. The ‘problem definition’ is weak and the proposed solutions seem a real mish-mash lacking any kind of consistency. It’s early days, but as yet I haven’t heard anything to convince me we were wrong in voting against it at the First Reading.
Sounds like a dog’s breakfast
The adequacy statement in the regulatory impact statement (p 2) doesn’t look good, does it?
I’m off to buy a windmill. Not sure where can I put it in Wellington that could get enough wind though??
Oh well. I’ll get an extra 5 a week in april when benefits go up. I’ve looked.
Shame my rent has increased by $10 and power about to increase as well.
I wonder if benefit rates will go up if GST increases and by how much and how much worse will I be when it does, if the benefits haven’t been increased to cover the increase in power that we all know is going to happen, due to ETS.
Hmmm. Maybe its time to nag my landlord to fix all the cracked windows that were here before I moved in. I’ll ask about insulation but that wont happen. Cold winter? Looks like it.
This Industry needs to be regulated or it will become a choice to eat or keep warm for many people.
[...] Electricity Industry Bill « Red Alert [...]
You have probably heard this all before, Labour was running the country for nearly 10 years before National won the last election. What happened to power prices in that time they went up & up. Labour could have improved things in the industry through regulation to help regular New Zealanders but did nothing, now in opposition it’s an issue that needs to be fixed/better managed. You had the chance but blew it. For those moaning about the ETS, Labour was planning to introduce a similar type of program.
Still doesn’t help me at the moment thought does it?
I don’t think that Labours version was quite what National introduced.
All I’m saying something has to be done.
I don’t really care who does it or who did what and when. That dosn’t really help me or others at this point in time.