I sat through all of the hearings on Gerry Brownlee’s Electricity Industry Bill. A lot of submitters questioned his plan to take Tekapo A and B power stations off Meridian Energy and give them to Genesis Energy (both state-owned SOEs). The Institute of Professional Engineers argued that it could lead to less efficient use of water as competing generators tried to maximise their competitive positions against each other. The Treasury argued in a written submission to the Minister that there wasn’t a robust business case / analysis. Unfortunately the National MPs chose to block Treasury from appearing before the Select Committee to explain their concerns.
This morning Gerry Brownlee appeared before the Commerce Select Committee to discuss the estimates for Vote Energy. I took the opportunity to ask him what his basis was for concluding that the asset swap was a good idea. He claimed that because there had been several dry years in the past decade there was evidence that Meridian hadn’t been managing the Waitaki water catchment efficiently. Basically he tried to blame the lack of rain in the South Island on Meridian. I know they are the biggest generator, but I don’t think their market power extends to controlling the weather.
State Owned Enterprises aren’t toys. They’re multi-million dollar enterprises. Any changes the government makes need to be based on robust business cases and rigorous analysis. Gerry Brownlee hasn’t done that. Former National Party Minister Max Bradford made a real hash of his power sector reforms of the 1990s – which led to huge increases in prices. Sadly for price-wary Kiwis, Gerry Brownlee and National appear to have learned nothing from their past mistakes.
