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

 


Electricity Authority brief based on flawed economic model

The Electricity Authority’s stakeholder briefing of February 5 shows that wholesale electricity prices have fallen from 9 cents to 7 cents per kilowatt-hour since mid-2012. Yet the residential prices reported by Government have risen by 3%. Why aren’t they falling?

The Authority doesn’t worry much about prices so long as their statistics prove there’s a lot of competition. Their figures indicate that competition can drive commercial and industrial prices their prices down by 17%. Residential consumers that can play the competitive market can cut their prices by 7%.

What the briefing failed to say is that if consumers can’t play the competitive game, their prices will be correspondingly higher than average.

The briefing document reads like an apology for residential price rises, and blame this mostly on the peaky demand of householders; But the analysis that lies behind the briefing, “Analysis of historical electricity industry costs”, shows that the differences are small. New power stations to meet residential demand would cost 12% more than the average cost of new power stations, and supplying new industrial demand would cost 11% less than average. Yet heavy industry actually pays only a little over half what average residential consumers pay.

So the numbers in the Analysis document do not actually support the Authority’s message, that residential price rises were needed to meet the cost of peaky demand.

The Authority’s position is basically flawed. Its economic model assumes that electricity demand will return to the growth of past years. It is in denial of the actual trend, which is also shown in overseas markets - Australia, the UK, and some American states. High prices are simply turning people off using electricity.

Overseas, the industry is worried about “the death spiral”, where people are switching off so fast that remaining consumers have to be charged more to keep the industry viable. Solar electricity is cheaper every year, home insulation means less heating, and electricity demand is falling, not only in New Zealand.

Unless the industry transforms itself to adapt to new technology, its investors face decreasing dividends and asset values. Only if it does transform can both consumers and companies look forward a brighter future.

ENDS

© 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>>

ALSO:

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>>

ALSO:

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>>

ALSO:

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>>

ALSO:

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>>

ALSO:

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

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news