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

22/2: Christchurch Quake Memorial To Be Unveiled

A city, a region, a nation and an international community impacted by the Canterbury Earthquakes will come together tomorrow to mark the sixth anniversary of the deadly quake and dedicate Oi Manawa Canterbury Earthquake National Memorial.

The Canterbury Earthquake National Memorial Dedication and Civic Memorial Service starts at 12 noon tomorrow, February 22, at the Memorial site on the Ōtākaro/Avon River, in the area bordered by the Montreal Street Bridge, Durham Street, and Cambridge and Oxford Terraces. More>>

 

Gordon Campbell: On The Mana-Maori Party Deal

If the self-interest involved wasn’t so blatant, the electorate deal between the Maori Party and Hone Harawira would be kind of poignant. It’s a bit like seeing the remaining members of Guns’n’Roses or the Eagles back on the road touring the nostalgia circuit… playing all the old hits of Maori unity and kaupapa Maori politics. More>>

ALSO:

Private Provision: First Social Bond To Focus On Mental Health

New Zealand’s first social bond will help around 1700 people with mental illness into work, Finance Minister Steven Joyce and Social Investment Minister Amy Adams say. More>>

ALSO:

Megaupload Case: High Court Rules Dotcom, Co-Accused Eligible For Extradion

Internet entrepreneur Kim Dotcom and his three co-accused are eligible for extradition to the United States, New Zealand's High Court ruled... Justice Murray Gilbert upheld a decision by the District Court that there were grounds for Dotcom, Mathias Ortmann, Bram van der Kolk and Finn Batato to be extradited. More>>

ALSO:

PREVIOUSLY:

Immigration: Short Reprieve For Nine Indian Students

A temporary hold on deportations of nine Indian students is a step in the right direction but the Government urgently needs to implement safeguards to stop further injustices to more international students, the Green Party says. More>>

EARLIER:

Port Hills Fire: Midday Update, Monday 20 February

• 9 homes destroyed
• 2 homes with partial damage. Damage includes things like cracked windows, heat damage.
• 3 properties with damage to other external structures e.g sheds or outbuildings More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news