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

Patience: Drive Safe

Be patient before passing is the AA's message for drivers this Labour weekend.

"People taking crazy risks to get past other vehicles is one of the most dangerous things on the road,” says AA spokesperson Dylan Thomsen.

“The weather is looking good for the long weekend so the roads will be busy. Unfortunately, that also increases the chances of people getting frustrated and trying a risky passing manoeuvre. When they get past, there will probably be more traffic up ahead anyway so it won’t get people there faster.” More>>

 
 

Parliament Today:

Employment Relations Bill: Govt Strains To Get Tea Break Law Through

The Government has been left with egg on its face - failing to get its much-vaunted, but hugely unpopular, meal break law passed in the first week of its new term, Labour spokesperson on Labour Issues Andrew Little says. More>>

ALSO:

Guns: Police Association Call To Arm Police Full Time

"The new minister gave his view, that Police do not need to be armed, while standing on the forecourt of parliament. The dark irony was that the interview followed immediately after breaking news of a gunman running amok in the Canadian parliament in Ottawa..." More>>

ALSO:

Gordon Campbell: On The Tokenism Of New Zealand's Role Against Islamic State

Our contribution against IS will be to send SAS forces to train the Iraqis? That’s like offering trainers to General Custer just as the 7th cavalry reached the Little Big Horn. More>>

ALSO:

Scoop Business: Shell And Todd Caught Drilling Without Approval

Multi-national oil company Shell’s New Zealand arm and local energy giant Todd Energy have breached the new law governing New Zealand’s Exclusive Economic Zone, the Environmental Protection Authority says in an Oct. 10 document released by the Green Party. More>>

ALSO:

Gordon Campbell: On Pharmac, Gough Whitlam And Sleater-Kinney

We’re not at the outset of these negotiations. The outset was six years ago, and negotiators were hoping to have some sort of ‘framework’ deal finished in time for the APEC meeting in a few weeks’ time. These ‘extreme’ positions are what we’ve reached near the intended end of the negotiations… More>>

ALSO:

PM Of Many Hats: Questions, No Answers On Whale Oil

Dr RUSSEL NORMAN (Co-Leader – Green) to the Prime Minister: How many times since November 2008 has he spoken with blogger Cameron Slater on the phone and how many times, if any, has he texted him?
Rt Hon JOHN KEY (Prime Minister): None in my capacity as Prime Minister. More>>

ALSO:

Aussie Investigation Dropped: Call On Minister McCully To Pursue The Case Of Balibo Five

West Papua Action is deeply concerned at the lack of any clear outcome from the Australian Federal Police inquiry into the 1975 deaths of the ‘Balibo Five’ including NZ journalist Gary Cunningham. More>>

ALSO:

'Feed The Kids' Bill: Metiria Turei To Lead Fight On Feeding Hungry Children

Green Party Co-leader Metiria Turei is urging all political parties to support the Feed the Kids Bill which she inherited today from Mana leader Hone Harawira. More>>

ALSO:

Parliament Today: State Opening Of Parliament

The House sat at 10.30am on Tuesday before MPs were summoned to hear the Speech from the Throne in the Legislative Council Chamber. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news