Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Papers Show Renewable Energy will be losers!

Electricity Commission Papers show Energy Efficiency and Renewable Energy will be losers!

"Energy efficiency providers and small-scale renewable energy suppliers will be the losers from the Government's Electricity Commission proposal, said Mrs Molly Melhuish, for the Sustainable Energy Forum after reviewing background papers prepared by officials prior to Government's 20 May decision. The papers were released yesterday following an Official Information request.

The papers show that the Electricity Commission will be a strictly political office. It will act as a "Crown Agency" directed to implement government policy rather than just having to take regard of it. "This seems particularly dangerous, as the Electricity Commission will be both intervenor and regulator " said Mrs Melhuish.

"Any change of Government would allow a change to the "policy settings" and market rules creating uncertainty for industry."

"The only aspect that is certain is that the sunk costs of boilers, turbines and wires which are built as part of the reserve capacity investments, will remain to suppress other more sustainable alternatives."

As a Crown Agency the Electricity Commission will be even less independent of Government than EECA or the Commerce Commission.

In the briefing papers, Treasury officials noted "All the options [for ensuring long-term reserve capability] are likely to increase the average price of electricity and reduce the volatility of wholesale spot prices, with these changes being more market the greater the amount of reserve capacity built into the system. ... the net impact on economic growth prospects is uncertain." (p.2)

The background papers also note: "...the [central purchaser] option may start with reserve capacity purchase only, but is likely to end up with the central purchaser becoming the coordinator of all demand and supply." [footnote, p. 6]

"... It is likely that the [central purchasing entity - the Commission] will adopt a risk-averse approach to its mandate of ensuring sufficient reserve generation capacity ... in the longer term experience suggests that, with administrative pricing and central decision making, an inappropriate level of reserve capacity is likely." [p. 7]

Treasury favoured options requiring the auctioning of hedge contracts each Spring, with mandatory participation for generators. This would have allowed any participants, including Government, to bid in, while progressively improving the liquidity of forward markets. The papers point out that vesting contracts, a mechanism used by ECNZ in 1996-1999, are a good example of these mechanisms - they worked well. BUT when ECNZ was split the new generators didn't renew them.

The papers also include a handwritten note from the Energy Minister, Pete Hodgson, commenting on Treasury's concerns, and expressing his view that "a little army of peakers [is] available which are low capital cost and high running cost", and that he expected these to cap spot prices at 15-20c/kWh, and should not to be called on at less than 10-13c/kWh. He also commented that these peaking generators "may need to be owned (or operated) centrally to avoid gaming."

SEF contends that these figures are far too low to allow market support for other solutions such as energy efficiency and small renewable energy projects.

Of major concern for the Sustainable Energy Forum identified in the papers, is that while demand-side management was called for by a small "technical experts' group" in February this aspect was almost totally ignored thereafter. The Government's 20 May decision was that the Reserve Market would specifically exclude any demand-side management solutions.

"Government rejected the mandatory hedge contracts option that would have reduced the market power of the large generators. Government concluded that legislation would provide for this option - but that it "should be only drawn on if required". More information on the cabinet papers is available at http://www.med.govt.nz/ers/electric/supply-security/cabinet/ policy-settings/policy-settings.pdf

Having read these background papers the Sustainable Energy Forum submission will be rejecting the Reserve Contract system in its entirety, and will be calling on Government to set up the Electricity Commission as an Independent Crown owned Entity. It should not invest in boilers, turbines or wires without giving demand-side investments (energy efficiency, small-scale renewabale energy and demand response) an equal opportunity to challenge high spot prices.

SEF will also call for electricity market rules and policies to be developed through a fully consultative process, and NOT behind closed doors as was done before the May 20 announcement.

"The Government decision as it stands will continue the shattering boom-bust cycle for energy efficiency companies and small-scale renewable energy equipment suppliers. They are swamped with work when there are shortages, but many are forced to leave the country to find work once power surpluses return" concluded Mrs Melhuish.

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Sector Opposes Bill: Local Government Bill Timeframe Extended

The Minister of Local Government Peseta Sam Lotu-Iiga has asked the Select Committee to extend the report back date for the Local Government Act 2002 Amendment Bill (No 2). More>>


Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>


Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>


General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>


Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>


Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news