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

Werewolf: What Does Winston Peters Want His Legacy To Be?

A lot of people in New Zealand seem to resent Winston Peters and the power that he appears to have. “Appears” being the operative word. In reality, Peters will have power only up to the point that he uses it.

By next week, he’ll have become just another junior player in an MMP governing arrangement, battling to hold onto the gains he was promised. More>>


Rising Toll: Road Safety Needs To Be A Higher Priority

Official advice released to the Green Party under the Official Information Act shows that the previous National Government dismissed an option to make road safety its most important transport priority after being told the road toll was rising. More>>


Wellington.Scoop: Arrests At Blockade Of "Weapons Expo"

“We encourage people in Wellington to get down to the Westpac Stadium now for a day of awesome peace action. There will be plenty of food, music and activities to keep us sustained through the day.” More>>


Rorschach Restructuring: PSA Taking Inland Revenue To Court Over Psychometrics

The Public Service Association will be seeing Inland Revenue in Employment Court over its intention to psychometrically test employees reapplying for their roles at the department as part of its controversial Business Transformation restructuring plan. More>>


Nuclear Disarmament: Nobel Peace Prize 2017 Awarded To ICAN

Congratulations from iCAN Aotearoa New Zealand to international iCAN, the other iCAN national campaigns and partner organisations, and the countless organisations and individuals who have worked so hard for a nuclear weapons-free world since 1945. More>>


Expenses: Waikato DHB CEO Resigns

An independent inquiry has identified that Dr Murray had spent more than the agreed $25K allocated for relocation costs, and other unauthorized expenses involving potential financial breaches of the chief executive’s obligations. More>>


Wellington.Scoop: Sad About The Trolley Buses?

The Regional Council’s MetLink is today spending money to tell us that it really loves Wellington’s trolley buses, even though they’re all being taken off our roads by the end of this month. More>>


Post-Election: Preliminary Coalition Talks Begin

New Zealand First will hold post-election preliminary discussions in Wellington with the National Party tomorrow morning and the Labour Party tomorrow afternoon. More>>




Featured InfoPages

Opening the Election