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

 

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

The Price Of Cheese: Cheddar At Eight-Year Low

Food prices decreased 0.5 percent in the year to June 2016, influenced by lower grocery food prices (down 2.3 percent), Statistics New Zealand said today. Compared with June 2015, cheese prices were down 9.5 percent, fresh milk was down 3.9 percent, and yoghurt was down 9.2 percent. More>>

ALSO:

Financial Advisers: New 'Customer-First' Obligations

Goldsmith plans to do away with the current adviser designations which he says have been "unsatisfactory" in that some advisers are obliged to disclose potential conflicts of interest and act in their customers' best interests, but others are not. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news