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Yet Another Electricity Crisis

Yet Another Electricity Crisis

The chances are everyone is reading more than enough about the war in Iraq at the moment, the uncertainty about the timing of its ending and the impact on the world economy. So in the presence of so much uncertainty lets have a look at what was always going to be a certainty – another electricity crisis. Hardly a surprise.

We’re heading into Winter again and in a country where infrastructure investment has been so poor in recent years we are facing yet another round of calls for consumers to cut back electricity use. The politically correct thing to do is of course to turn one’s lights off and insulate the hot water cylinder etc. But what will this really achieve? Did the savings asked for and delivered two years ago lead to accelerated development of electricity generation to meet the growing shortage? Did the government introduce legislation making it easier for generation builders to get their work done – in the area of resource consent for instance? The answer in both cases would appear to be no.

For sure things have crept up on the government a bit with the forecast date for Maui gas running out being brought forward in time and El Nino inspired dry conditions around the hydro lakes. But if the savings campaign last time did not jolt the various players into action why should it do so again this time? The clear risk is that an expectation will develop in some quarters of a permanent change in electricity consumption which would make the construction of environment-disturbing electricity generation facilities unnecessary.

To illustrate, here is text from a column we wrote on September 17 2001 following the ending of the official electricity crisis that year and announcement that through our great efforts we had saved around 8% electricity use.

“We have been asked by the government to continue saving if we can and that we should be capable of ongoing savings around 4%. Now this sounds nice, and one has to admit that avoiding waste is good. But think about what the people ultimately controlling the expansion of generating capacity in New Zealand may now be thinking. Clearly we need more electricity supply. But if the planners now factor in ongoing savings of 4% isn’t it true that the construction of such extra capacity will be delayed slightly?

In effect the government has attempted to construct an environment in which we feel some sort of community obligation to save electricity. The logical conclusion of this is that next time shortages come around we will be expected to again pull in our belts and save not a target of 10% but maybe 15%.

The unfortunate fact of the matter is that our relative success at saving 8% of normal electricity use means that the incentive to build more capacity is reduced. The incentive for users during the crisis was not to cut consumption but to boost it. Doing so would send a message to the government, the implementers of the Resource Management Act and the numerous greenies increasingly influencing policy that we are not a semi-socialist paradise in which a call from government brings an immediate strong community response.

Had we at least continued to use as much power as normal isn’t it likely that the government would have concluded they cannot rely on us in an emergency, and must smooth the legislative and bureaucratic pathways to hasten construction of new generating capacity?”

Thankfully this time around we are seeing some sign of action. A special committee has been set up (committees do always work don’t they?) to examine the crisis. We should judge the success of this committee headed by the Minister of Finance not on what changes may be made to the running of the existing electricity system in NZ as seems to be the thrust at the moment, but on whether construction of new generation capacity is hastened. What is the incentive for consumers this Winter then, to be politically correct and save electricity, or send a message to the planners by turning extra lights on?

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