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Electricity Industry Crisis

Electricity Industry Crisis - needs common sense solutions

"The electricity generation and retailing sector is heading for a crisis that could undermine our economic growth", said Mr Peter Malone, Chair of the Network Tasman Trust. The Nelson Mail¹s excellent editorial, talking of the Dobson scheme, was so correct.

At the Annual Meeting of the Energy Trusts of New Zealand Inc, held in Wellington two weeks ago, Trustees were left in no doubt about the problems facing the industry. and the country. ŒŒWe had extensive discussions and debate on solutions to help handle the problems ahead", Mr Malone said.

"The electricity industry needs to be reviewed to ensure there are incentives to enable investment in electricity transmission, and to guarantee much-needed generation facilities are built. It¹s a gloomy outlook." he said. "All this has been brought about by the intrusion of both national and labour governments enforcing changes based on Œmarket-forces¹ ideology where profit drives and the bottom line is all important.

It is time ideology was put aside and common sense re-introduced. Talking about effective competition resolving aberrations in the market is a nonsense. So long as government owns 2/3rds of the generation and energy retailing and keeps them in the three SOEs, competition is artificial and a farce. Their directors play with our limited resources with the goal of maximizing returns. Just where does the public-good fare?

"The government is certainly doing all right out of it, with its dividends and tax take. We are missing out. People are being put out of work." Said Mr. Malone

In a country of only 4 million people, spread over 2000 kilometers of difficult terrain, electricity is indeed the one truly essential but monopolistic public utility . We cannot afford to play market games with it. The government and the National opposition should put ideology aside, banish the ideologues and start discussing answers with informed people who know the business and who value their country ahead of the dollar sign. Line companies can help.

For instance, Lines companies can transparently separate their monopoly business from contestable operations to eliminate any alleged cross subsidization ,if that is seen as a problem, thereby freeing the community-owned trusts to invest in other parts of the sector. "We support that view," said Mr Malone. "We have investments of more than $107 million in Network Tasman Limited and we cannot and will not stand aside during this time of potential crisis and need for essential adjustment of the industry", he said.

Our Trust is keen to help bring about change and we offer our input to the Government in the changes that are so desperately needed, said Mr Malone.

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