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Friday, April 19, 2013

Power play

The fact that the power companies shares fell and the fact National are so hysterical is because Labour and the Greens co-operating on economic policy is the most tangible sign to the electorate that they are ready to govern. This is the sort of coalition pre-positioning people want to see - albeit hastened by the Mighty River Power privatisation. The Vector CEO thinks it is viable, but the Tories have freaked. Farrar was flipping out. Simon Bridges was saying the spectre of North Korea loomed over the country. Steven Joyce was pretty much lining up dancing cossaks today - saying the fate of South Korea also awaits. His twitter feed:

Steven Joyce ‏@stevenljoyce
Labour-Greens power fans citing Sth Korea example y'day. Chk this: 10% price increases, 4 yrs of losses, shortages...

Value of Contact Energy, Trustpower, & Infratril together down $643M in less than 24 hours. So this idea's not economic vandalism?

@stevenljoyce @NZGreens So minority Contact mum&dad shareholders r just legitimate collateral damage? A truly destructive attitude to NZ economy & jobs   @stevenljoyce Labour/Greens electricity plan wld reduce savings, investment & jobs - & not reduce power prices. Apart from that... --   Joyce seems very concerned about the private companies and their shareholders; not so much about the consumers.   NZ Herald:
Mr Bridges and Economic Development Minister Steven Joyce said the plan amounted to nationalising the electricity industry.
"They may want to return to sort of United Soviet Socialist Republic of New Zealand days but National certainly doesn't," Mr Bridges said.

The Government says Labour and the Greens are trying to sink the Mighty River Power share float with a hastily drafted threat to impose Soviet-style intervention on the electricity market.

However, Labour and the Greens say their plan to regulate wholesale prices is a sound policy used in several American states and will halt rising power costs, cut household power bills by as much as $300 a year and give the economy a $450 million a year boost.
Labour leader David Shearer and Greens co-leader Russel Norman yesterday said that if they won next year's election they would establish a new agency called New Zealand Power which would act as a single buyer of wholesale electricity.
The agency would also have the power to set prices based on generators' operating costs and a fair return on capital. NZ Power would sell power to electricity retailers at prices lower than those on the current wholesale market and those savings would be passed on to consumers.
However, those savings would come at the expense of power companies.
Well, cry me a mighty river.

Although I'm not a big fan of more layers of bureaucracy - esp. when the legislated and regulated divisions of the electricity industry are the cause of the cartel situation - if the end result is lowering the cost to consumers (and business) then what is the net harm? This one act is not going to murder capitalism. The artificiality of the market and the corporations' necessity to create margins and support the middlmen may represent employment and turn-over for their ticket-clipping operation, but they do not enable efficiency. I don't know whether the Power NZ single-buyer concept is the right answer for NZ, but it is that there is a collective answer that counts more. I wonder if NZ First will join in?


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