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

 

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Prices Up, Volume Down: March NZ House Sales Drop 10% As Loan Curbs Bite

New Zealand house sales dropped 10 percent in March from a year earlier as the Reserve Bank’s restrictions on low-equity mortgages continue to weigh on sales of cheaper property. More>>

ALSO:

Scoop Business: Chorus To Appeal Copper Pricing Judgment

Chorus will appeal a High Court ruling upholding the Commerce Commission’s determination setting the regulated prices on the telecommunications network operator’s copper lines. More>>

ALSO:

Earlier:

Cars: Precautionary Recalls Announced For Toyota Vehicles

Toyota advises that a number of its New Zealand vehicles are affected by a series of precautionary global recalls. Toyota New Zealand General Manager Customer Services Spencer Morris stressed that the recalls are precautionary. More>>

ALSO:

'Gardening Club': Air Freight Cartel Nets Almost $12 Million In Penalties

The High Court in Auckland has today ordered Swiss company Kuehne + Nagel International AG to pay a penalty of $3.1 million plus costs for breaches of the Commerce Act. Kuehne + Nagel’s penalty brings the total penalties ordered in this case to $11.95 million ... More>>

ALSO:

Crown Accounts: Revenue Below Projections

Core Crown tax revenue has increased by $1.9 billion (or 5.0%) compared to the same time last year. However this was $1.1 billion less than expected and is reflected across most tax types, continuing the pattern of recent months. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news