Think Big - Regenerated?

The Government's premature decision to invest in a reserve electricity generation plant on Contact Energy's Whirinaki site smacks of 'Think Big', says Federated Farmers National Vice President Charlie Pedersen.

"Previous Government forays into electricity generation led to either significant shortage of power or embarrassing surpluses which were sold off at discounted prices to industry on long-term guaranteed contracts.

"Rather than expose taxpayers to unnecessary costs, the Government should allow generators to provide the necessary generation capacity based on sound commercial principles.

"Given that New Zealand generation capacity is still heavily reliant on hydro capacity, it is inevitable that there will be increases in the spot price of electricity in dry years. This in itself is important in sending generators signals about the viability of investing in further capacity.

"Consumers are in the best position to determine what risks they are prepared to accept rather than being told 'big brother knows best'.

"The Government should not expose consumers to significant costs without looking at alternative mechanisms to mitigate the impacts of '1 in 60' year dry conditions.

"It is unlikely that a cost/benefit analysis of the Government's proposal to procure '1 in 60' dry year capacity stacks up against alternative risk minimisation strategies such as the recent 'Target 10%' campaign."

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