Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Level playing field in electricity industry?

A level playing field in the New Zealand electricity industry?

A major new report doubts it.

Investment in generation shared between public and private-sector?

The conditions are not complete.

The New Zealand energy sector is no place for complacency. The country urgently needs new investment in energy generation.

The question is, where will this new investment come from? From the private sector? From the government?

All things being equal, you might expect the private sector to take up its share of the next phase of investment.

The problem is, all things aren’t equal. Far from it. Market inconsistencies create structural incongruities to essential new energy investment.

It’s a conclusion with unsettling challenges for policy-makers, and for the energy sector as a whole.

The New Zealand energy sector; under a welcome microscope.

We attach a comprehensive and detailed investigation, Investment in the New Zealand Electricity Industry, undertaken by Dr Alastair Marsden, Dr Russell Poskitt and Dr John Small, of Auckland UniServices Limited during the past year.

Co-commissioned by Alliant Energy New Zealand Ltd and TrustPower Ltd, the study investigates the financial structure and performance of the five largest producers of electricity in New Zealand, of which three are State-owned companies, over a five year period. The report considers the implications of that structure and performance for new investment in the industry. Its analysis is thorough. Its conclusions are clear.

The authors’ considered view is that the State Owned Enterprises Act is not working as intended in the electricity industry. Commercial imperatives appear weaker for SOEs than for their privately owned rivals.

The Challenge

The report highlights material undervaluation of assets, making cash returns required to cover the capital costs of new investment, lower and easier to achieve. The acceptance by the Government of lower expected returns from its investment as a shareholder, is lower than would be acceptable to commercially focussed shareholders. By doing this, the Government provides a systemic advantage to investment in future generation by SOE's.

With a playing field such as this, investment is more likely to come from the State-owned companies than the private sector.

The questions need to be asked. Is this an appropriate use of available funds? Does this assist in meeting compelling energy needs in a truly competitive sector?

Not without a realistic reassessment of the existing model.

We invite you to read, absorb and respond to this significant report.

-Ends-

For more information:

Simon Young Keith Tempest

Managing Director Chief Executive

Alliant Energy New Zealand Ltd TrustPower Ltd

09 917 4802 07 572 9800

To talk to the authors:

1. Arrange a phone interview

With: Dr Alastair Marsden, Dr Russell Poskitt and Dr John Small

Time: Call Veronicah at 09 917 4801 for an appointment

2. Participate in an online forum

Alliant Energy New Zealand is hosting an online forum for open debate of the report, its conclusions and their implications.

We invite you to join the debate from the link to the Forum on our website http://www.alliantenergy.co.nz/ or by visiting the Forum direct at http://forum.alliantenergy.co.nz We look forward to your coverage, comment and feedback.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Westpac: Sets Out Plan To Go Cheque-Free

Westpac NZ has announced details of its plan to phase out cheques, after signalling in May that it would be supporting a move to other forms of payment. Cheques will cease to be available as a means of payment after 25 June 2021. Westpac NZ General ... More>>

ALSO:

NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>

ALSO:

Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>

ALSO:

Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>

ALSO:



Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>

ALSO:

Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>

ALSO: