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

 


New Report: No overall economic benefits to NZ Power

Media release
28 February 2014

New Report: No overall economic benefits to NZ Power


An analysis of the NZ Power proposal finds it would not bring enough economic benefit to be worth pursuing.

NZ Power is the electricity policy of the Labour and Greens parties for the 2014 election.

The policy would involve the state acting as central planner for the sector and would require all generators to sell their electricity wholesale to a state-owned buyer at a price set by the buyer, with the aim of reducing retail electricity costs to households by $300 per year.

Analysis of the proposal by economics firms Sapere Research Group and others have found the proposal would be unlikely to deliver a well-functioning electricity market and unlikely to deliver lower prices.

A new analysis by Infometrics looks beyond the electricity market at some of the impacts on the wider economy.

It shows that if the policy achieved lower retail electricity prices, these would be mostly outweighed by large negative effects elsewhere in the economy.

Infometrics notes that lower retail electricity prices would encourage more use of electricity.

It says the NZ Power proposal would most help industries that are heavy users of electricity, giving them a competitive advantage over less heavy users.

More electricity consumption would require more generation, including more fossil-fuelled generation. An extra 300 MW of generation capacity would be required.

This would lead to greater emissions. Greenhouse gases would rise by half a percent, requiring the purchase of carbon credits if New Zealand takes on any international emissions responsibility targets.

Lower generator revenues would result in lower dividends paid to the government from state-owned generators, and lower tax revenues to the government from privately owned generators. Taxes paid by households would have to rise by $400 million per year to compensate.

Taxes would rise by about $250 a year per household.

The result would be a net gain in real household spending of $120 a year instead of $300 a year as claimed by the NZ Power proposal.

No new jobs are likely to be created.

Infometrics says the small improvement in electricity prices would not be the result of a more productive use of resources, but of switching resources around and incurring higher costs elsewhere.

Meanwhile, the wider costs including the removal of market-based efficiencies from the economy, weakened investment, and lower security of supply could greatly outweigh this benefit.

Infometrics concludes that the proposal does not promise enough benefits to be worth pursuing.


The Infometrics analysis of NZ Power is here on www.businessnz.org.nz


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Drones: First Certificate Issued Under New UAV Rules

Transport Minister Simon Bridges and Associate Transport Minister Craig Foss say the first certified flight of an unmanned helicopter under new aviation rules is a great example of how they can enable commercial use. More>>

ALSO:

GE Swedes And Cow Deaths: Plant Analysis Backs Up Earlier Advice

The industry body is recommending that farmers do not feed Herbicide Tolerant (HT) swedes to cows in spring when the animals are in late pregnancy or early lactation. DairyNZ is also advising caution if farmers are considering other leafy varieties. More>>

ALSO:

Statistics: Dairy And Travel Still Our Largest Export Earners

New Zealand earned $2.3 billion more from exports than we spent on imports during the year ended June 2015... total exports of goods and services were $67.5 billion, while total imports were $65.1 billion. More>>

ALSO:

Approval: Air New Zealand And Air China Launch New Alliance Route

Air New Zealand and Air China have today launched joint sales for a new daily direct service between Auckland and Beijing after receiving approval from New Zealand Minister of Transport Hon Simon Bridges to form a strategic alliance. More>>

ALSO:

Money Trading: FX Trader Jin Yuan Finance Warned Over Lack Of Monitoring

Jin Yuan Finance, an Auckland-based foreign exchange trader, has been warned over its lack of anti-money laundering processes in place in the first public notification by the Department of Internal Affairs. More>>

ALSO:

Auckland Surge, Possible Peak: House Values Accelerate At Fastest Annual Pace In 8 Years

New Zealand residential property values rose at their fastest annual pace in eight years in August, pushed higher by overflowing demand in Auckland, which is showing signs speculators think it has reached its peak, according to Quotable Value. More>>

ALSO:

Cash Money: Reserve Bank Launches New $5 And $10 Banknotes

The $5 and $10 final banknotes were revealed at an event at the Bank in Wellington, and will start to be released from mid-October 2015. More>>

ALSO:

Truck Sales Booted: Commerce Commission Files Charges Against Mobile Trader

The Commerce Commission has filed charges against a mobile trader, or truck shop operator, claiming he obtained money from customers by deception and never intended to supply them with the goods they paid for. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news