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MEUG Statement on National Policy Statement

MAJOR ELECTRICITY USERS' GROUP


Friday, 22nd February 2008
Comments on proposed National Policy Statement on Renewable Energy make a mockery of requirement for consultation

“The Executive Director of the Major Electricity Users’ Group believes that the latest position of Government on renewable energy will compound the risks to security of supply and heighten the risk of much higher electricity prices with consequent impacts on investment by the productive sectors. Mr Ralph Matthes was commenting on a speech by the Minister of Energy, Hon David Parker, yesterday where he said:

‘The government is preparing a National Policy Statement on Renewable Energy to provide more guidance to local authorities. The government intends to have this policy statement in place by the end of next year – in time to influence the growing numbers of renewable energy projects that are being proposed.’

Mr Matthes said “This statement makes a mockery of the requirement under the RMA for the government to have an open mind on any proposed National Policy Statement following public consultation using an independent Board of Inquiry or an equivalent process . The government appears to have decided already what the outcome of that consultation will be.

“This high handed approach that the government knows best and therefore it’s alright to give direction to the electricity market creates enormous risks for all users of electricity – big and small.

“The proposed ban on new thermal power stations was the last bomb shell the Minister of Energy announced late last year. There was no prior public consultation on the ban before it was announced. The Regulatory Impact Statement the Minister relied on to support the ban didn’t quantify a single benefit or cost and there was no sensitivity analysis to consider what might happen if some of the government’s predictions of the future are wrong.

“There is a risk Government has assumed existing gas and coal fired stations can be used as instantaneous back up to cover real time shortfalls in supply from wind farm and hydro output over the next 10 years, with only a few peaking thermal power stations needing to be exempted from the ban to cover those risks. The limitations of the models relied upon by government is evident this summer when lack of wind almost lead to forced blackouts during peak demand over afternoons. That outcome wasn’t modelled. The models the Minister relies upon are very aggregate forecasts looking at winter peak periods.

“Consumers are entitled to a first world electricity service in terms of security of supply, reliability and price stability. A market with as few interventions as possible will best achieve those outcomes. The ban on thermal generation is an unnecessary intervention because the establishment of an Emissions Trading Scheme will ensure the international price of greenhouse gas emissions will be considered by investors in all types of generation plant.

“MEUG believe there is a persuasive case to place before the select committee considering the proposed ban because any proposal which jeopardizes secure energy supplies must be subjected to extremely close scrutiny and analysis. New Zealand needs to have as many options as possible to ensure the lights stay on and prices remain internationally competitive and we do not see repeats of 1992, 2001, 2003 and the uncertainties surrounding 2008.

“The Minister’s predetermination of a proposed National Policy Statement on Renewable Energy doesn’t give us any sense we’ll get a fair hearing on whether that’s a good idea or not.

“The Government has made carbon neutrality by 2025 and this 10 year ban on thermal generation (with a yet to be announced caveat relating to peak load stations) a centre piece of its sustainability campaign. Rather than the debate being over on this issue it is now critical for a focussed debate to take place,” concluded Mr Matthes.

ENDS


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