Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Labour-Greens power policy could work, says Vector CEO

Labour-Greens power policy could work, says Vector CEO Mackenzie

By Pattrick Smellie

April 19 (BusinessDesk) - The electricity policy announced by the Labour and Green parties could be made to work and the current debate is overly emotive, says the chief executive of the regulated monopoly electricity and gas network owner, Vector.

Simon Mackenzie told BusinessDesk he was encouraged by the fact the proposed central purchaser system would incentivise commercially rational investment in energy efficiency, and that the Opposition parties were not pursuing direct subsidies.

He also welcomed the fact Labour was proposing to simplify regulation of lines companies, which has become enmeshed in the courts after policies Labour implemented was "not tracking as was intended," Mackenzie said.

There was "no perfect model" for electricity systems, and other countries used similar methods to set prices and to procure investment in new power plants as demand rises. At present, new generation is procured by competing generators identifying the "next least-cost" of new generation and deciding to build it.

Under the Labour-Greens model, a central buying agency and market regulator, NZ Power, would tender for new generation capacity.

"There's competition for providing that next plant," said Mackenzie, who stressed he was "not taking political sides."

"The model is used in other jurisdictions. It has its pros and cons. It's made to work."

The Labour Party's regional development spokesman Shane Jones told BusinessDesk he had taken some convincing to abandon the market model which Labour presided over during its nine years in power from 1999.

But he was convinced lower-priced electricity would create jobs in energy-intensive regional activities such as the timber industry.

The Labour-Green policy would deliver an "equity dividend" for New Zealand households and businesses by removing some of the profits currently made by power companies.

"Not only asset owners need dividends," said Jones. "Politicians need dividends as well."

To win the 2014 election, Labour needed to move about 5 to 7 percent of the voting public to favour it.

He suggested energy analysts' capacity to "make 5 to 7 percent of the public hate us (because of this policy) is zero. Our capacity to impress that percentage (with this policy) is infinite."

Mackenzie said the Labour-Greens policy was "focusing on small-scale generation, energy efficiency and how that works in the market not through subsidies."

He was defensive about generator-retailers trying to "pass the parcel" on rising power prices to lines companies.

Increased national grid transmission charges, reflecting a multi-billion upgrade by the state-owned monopoly grid owner, Transpower, are one reason electricity prices are forecast to keep rising in coming years. Local network charges have also been rising, although the Commerce Commission has ordered deep cuts in charges on some networks, including Vector's.

Contact Energy CEO Dennis Barnes has questioned whether the company would have invested $2.5 billion on new geothermal and gas-fired generation plant in the last five years if the Labour-Green policy had been in place.

Shares of Contact Energy have fallen about 10 percent in the day since the policy was announced, leading to expectations the policy announcement has effectively cut the issue price for shares of state-owned generator-retailer MightyRiverPower shares, 49 percent of which are being offered to the public ahead of a sharemarket listing scheduled for May 10.

The other NZX-listed generator-retailer, TrustPower, has fallen 6.8 percent today to break through its previous 52-week low of $7.20 to trade just after noon at $7.05. TrustPower's 50.5 percent owner, Infratil, has fallen 2.6 percent to $2.27. Contact, Infratil, and TrustPower are leading falling stocks in trading today.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Balance Of Trade: NZ Posts Trade Deficit In October On Falling Dairy Exports

New Zealand’s posted its largest monthly trade deficit for October in six years, while narrowing the shortfall from September, led by a fall in dairy exports to China while all main imports into the country rose. More>>

ALSO:

Gigatown Winner: Plenty Of Positives For Dunedin

Although the city has taken the Gigatown title, along with new ultrafast 1Gbps broadband and funding for $700,000 worth of UFB-related initiatives across the community, Mr Cull says Dunedin has gained so much more through its involvement. More>>

ALSO:

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news