If New Zealanders are asked over the next few years to reduce power use or face blackouts, the responsibility will fall squarely on Energy Minister Gerry Brownlee. Just days before Christmas, while everyone was distracted by other things, he announced that the Whirinaki power plant will be sold and the reserve energy scheme put in place by the previous government will be abolished.
In other words, if we have a dry winter and the hydro lake levels fall too low, there won’t be a back up generator. Brownlee is placing his blind faith in the market, just as Max Bradford did before him. The market failed to deliver in the past, there is no reason to think it will behave any differently in the future.
An effectively functioning market will match supply and demand as closely as possible. That works OK when everything is operating normally, but it doesn’t leave much in the way of a ‘reserve’ should unforseen events happen, such as a dry winter. It wouldn’t make economic sense, what commercial operator looking for a profit would invest in a reserve generator that would only be needed in exceptional circumstances? That’s why the last government put a back-up system in place.
The announcement that the Whirinaki plant will be sold also amounts to another broken promise from the National government. Before the election they promised Kiwis they wouldn’t sell any state assets during their first term, yet now they’re putting a multi-million dollar power plant on the auction block.
National’s decision to sell Whirinaki and abolish the reserve energy scheme is short-sighted and foolish. It’s ordinary kiwis who will pay the price if things go wrong. If we have a dry winter and electricity generation can’t meet demand, prices will sky rocket.