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

 

Post-Post: Brian Roche To Step Down As NZ Post CEO

Brian Roche will step down as chief executive of New Zealand Post in April 2017, having led the state-owned postal service's drive to adjust to shrinking mail volumes with a combination of cost cuts, asset sales, modernisation and expansion of new businesses. More>>

ALSO:

Company Results: Air NZ Rides The Tourism Boom With Record Full-Year Earnings

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history. More>>

ALSO:

New PGP: Sheep Milk Industry Gets $12.6M Crown Funding

The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement. More>>

ALSO:

Half Full: Fonterra Raises Forecast Milk Price

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 50 cents to $4.75 per kgMS. When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.25 to $5.35 before retentions. More>>

ALSO:

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news