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Retail Price Inquiry underpinned by fake economics

Press release: Retail Price Inquiry underpinned by fake economics
Molly Melhuish 28 March 2018

Fake economics is set to underpin Government’s Retail Price Inquiry. It will be carried out by Ministry of Business, Innovation and Employment (MBIE) and its lead consultant is Concept Consulting.

Both have been wholly captured by Big-Electricity interests – the major generator-retailers and network companies - whose profits depend on growth in electricity demand. Today’s electricity lobby is no more public-spirted than Big Tobacco, or the sugar lobby, or the fake science behind climate-deniers.

Domestic electricity users must achieve an equal weight in how this inquiry is set up. We need support from economic consultants who recognise the many benefits of investment in household energy efficiency and locally supplied renewable energy, in competition with the big-electricity businesses who lobby to protect their interests.

Concept’s three massive reports on economics of new technologies – solar energy, batteries and electric vehicles – are being reported to conclude that solar rooftops will increase climate-warming emissions, and that the low fixed charge regime harms low-income consumers.

Those conclusions derive entirely from the assumptions behind the analyses, and reflect MBIE’s own electricity scenarios which assume continuing growth of electricity demand requiring building of $13 billion of new power stations by 2050, plus new transmission, and local lines assets.

Big-Electricity competes with consumer-driven investments in rooftop solar – and also home insulation, and efficient lightbulbs and appliances. Those investments stabilised domestic electricity demand, which has not grown since 2009 despite significant population growth. The consumer investment in solar + batteries assumed in MBIE’s new-technology scenarios would come to $7 billion by 2050.

Government refused to consult domestic consumers on the terms of reference, and failed to answer at least two requests for consultation. Submissions on the TOR came only from big-electricity interests – power companies, major electricity users and Business New Zealand. Submissions refer to a “consensus” that the Low Fixed Charges regulations should be repealed immediately.

This Retail Price Inquiry is the wolf being set to guard the henhouse. Big Electricity has wholly captured the Inquiry. Unless policy-neutral economics replaces the flawed assumptions of officials and their favoured consultants, the monopoly interests will continue to suppress not only solar rooftops but also household energy efficiency and sustainable home heating.

Householders will face continuing high power bills, and their investments in energy efficiency, conservation and renewable energy will be made increasingly uneconomic through the loss of the Low Fixed Charges regime.

Ends

Some sources:

MBIE will carry out the Inquiry, and Concept Consulting the lead consultant:
https://www.gets.govt.nz/MBIE/ExternalTenderDetails.htm?id=19433032

$13 billion new power stations – - for the “disruptive” and “low carbon” scenarios, others are $11-12 billion. From MBIE Electricity Demand and Generation Scenarios,
http://www.mbie.govt.nz/info-services/sectors-industries/energy/energy-data-modelling/modelling/electricity-demand-and-generation-scenarios/edgs-2016
click on “Results Scenario Summary XLXS 921 kb”, and open the tab “system cost”

How fixed charges suppress household investment in energy efficiency and renewables:
https://www.raponline.org/wp-content/uploads/2018/01/rap-ck-mh-aj-network-tariff-design-for-smart-future_2018-jan-19.pdf
Fixed charges take the power of choice out of consumers’ hands...resulting in increased costs for all by driving excessive investments in underutilised grid infrastructure”

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