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Breaking Down Market Disciplines

Breaking Down Market Disciplines

"We have now seen the spectre of Government announcing the construction of a new 155-megawatt oil-fired power plant - it seems that Labour isn't satisfied with its state-owned monopolies controlling the energy sector, it now wants to return to the days when energy decisions were made around the Cabinet table" ACT New Zealand Deputy Leader and Energy Spokesman Ken Shirley said today.

"This is a complete breakdown of market disciplines. What process did the Government take in coming to this investment decision, and how will we ever know if it was the least cost option?" Mr Shirley said.

"We now have a Government making major arbitrary decisions that can only compound the serious distortions in the energy market.

"This decision is not a Labour first. We saw Kawerau's geothermal fields passed to Mighty River Power by Government decree, without any consideration of competitive bids. We have also seen Cabinet override the SOE model by directing Genesis on reserve coal stocks.

"It seems the days of relying upon the market and competition to provide least cost options have ended, as we progressively slide back to the former inefficiencies of Government control and poor decision-making. We are still servicing the debt on the failed `Think Big' projects, which resulted from decisions made by Cabinet ignoring market disciplines," Mr Shirley said.

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