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Power to the people

Written By: - Date published: 5:35 am, May 22nd, 2009 - 52 comments
Categories: economy - Tags:

This just in – the electricity market isn’t working.

Well, plenty of people were saying that would happen back in the 1990s when National insisted on giving it a go. They split up the ECNZ into four bite size pieces to compete against each other. They planned to sell them all and create a totally private electricity market but only had time to flog off Contact before they lost power.

Since then we’ve had to deal with this dumb monopolistic system that’s mostly public-owned but doesn’t act in the public interest. Labour’s best effort to fix it was the Electricity Commission – a half-hearted effort to stop the generator/retailers from taking super-profits by regulating the market.

It didn’t work. We didn’t get enough generation and transmission as we needed put in. The government couldn’t get its own SOEs to follow its climate change policies; they act like profit-maximising corporates instead. Trying to use price to destroy demand during dry years just led to politically untenable profits flowing to Contact’s shareholders and the government.

National is now acting all angry at the electricity companies and warning them not to increase prices any further. This just months after they demanded bigger profits from those same SOEs.

National’s solution is to get rid of the Electricity Commission and break up the SOEs into smaller SOEs ready for selling. That wouldn’t create a better market. You don’t get good markets in natural monopolies. It wouldn’t lead to cheaper power having more companies trying to sell you an identical product just leads to them spending more on advertising. It would leave one huge company, Contact, to play NZ’s version of Enron in California. You might think that we would have learned that unregulated capitalists don’t always act in the public interest over the last couple of years but it seems National hasn’t.

The real solution is to get rid of this whole sham. Buy back Contact (work out a fair share price and do it through legislation). Put the whole thing back into one and set it some simple goals: reliable supply at a steady, low price and phasing out fossil fuels. Don’t worry about profits. Even now, profits are basically just an electricity tax.

Forget the neoliberal daydream of a real electricity market. Get back to having an electricity system that’s just about giving us cheap, green power when we want it.

52 comments on “Power to the people”

  1. Pascal's bookie 1

    Forget the neoliberal daydream of a real electricity market. Get back to having an electricity system that’s just about giving us cheap, green power when we want it.

    Gasp.

    Just because it makes sense, might work, and would be heaps better doesn’t mean it isn’t sacrilege Eddie.

  2. cocamc 2

    Now lets blame the Electricity Sector – and of course it’s all Nationals fault. Yesterday this blog blamed the the CEO’s and businesses.
    Whose next to blame? You’re running out of targets.

    Buying back Contact Energy is not the answer, firstly we’ve got no money to do that at the moment. Adjust the system maybe the answer – allow the lines companies to retail and generate and create more competition in the network for consumers

    • Pascal's bookie 2.1

      Yeah because the generation/retailers wouldn’t just buy the lines co’s. But good to see you are keeping with the sacrilege theme and running the faith based solution.

    • lprent 2.2

      did you read the post. He said that the electricity generators were acting like semi monopolistic corporates. Same thought. But I guess you just wanted to spin a line.

      • bilbo 2.2.1

        How much do the SO power companies return to the government ?

        If it’s small enough figure why not direct them to run at cost leading and move customers from Contact to the SOEs thereby driving down their revenue and share price and pick them up cheap ?

        Often makes me wonder why the govt hasn’t done something similar with the banking sector ……. why does all the IRD business still go through Westpac rather than Kiwibank ?

        • Clarke 2.2.1.1

          Often makes me wonder why the govt hasn’t done something similar with the banking sector . why does all the IRD business still go through Westpac rather than Kiwibank ?

          Because Treasury is still worshipping the neo-liberal demi-god of “Efficiency”. If you discount all of the externalities to zero, then it’s more “efficient” for IRD to save 0.1 cents per transaction by going with Westpac’s lower contract price.

          In Treasury’s world, keeping jobs in New Zealand, not exporting the bank profits, building New Zealand’s capital base and all the other benefits that would come from keeping government business on-shore aren’t actually counted. Hence the Westpac decision.

          If you go and have a look around the Chief Executive positions in the public sector, you’ll discover that a non-trivial percentage of the incumbents are ex-Treasury, which is why this anti-logic seems so pervasive.

          • insider 2.2.1.1.1

            Primarily they go with Westpac because it has the computing and transactional power to process the massive volume of payments government makes. Kiwibank doesn’t or didn;t have that when last tendered.

        • cocamc 2.2.1.2

          Ok Bilbo
          The dividends that are received from the SOE’s go back into the Govt coffers for other programs (Police, roading, social spending). You take that away and the shortfall has to come from somewhere else. Oh that’s right, just tax the “Rich” to make up the difference.

          • Clarke 2.2.1.2.1

            cocamc –

            Are you serious? If the electricity companies hadn’t been systematically raping their customers, there would be another $4 billion in income sloshing around inside NZ. And remember, one of the biggest players is Contact, which is predominantly owned by offshore investors – pray tell how the investors who have been banking the dividend cheques into overseas bank accounts help pay for the Police, roading and social spending.

          • cocamc 2.2.1.2.2

            Clarke
            Read my response, I said SOE’s send money to the Govt.

            Contact is a public company so different situation. But they invest money building generation facilities, that contibutes to the economy with jobs, etc.

          • Clarke 2.2.1.2.3

            Contact is a public company so different situation. But they invest money building generation facilities, that contibutes to the economy with jobs, etc.

            That’s a truly lame response.

            Contact have 24% of the generating market, according to MED. If the gaming of the market has been happening on a pro-rata basis, this means that Contact are guilty of pulling an additional $960 million out of New Zealand, which has benefited predominantly overseas shareholders.

            We could have used a public project to build the same generation facilities and created the same number of jobs as Contact did, and the only effect would be that New Zealanders would be $960 million richer!

        • Swampy 2.2.1.3

          Lots. probably most of the amount alleged to be overcharged found its way into the Labour Government’s coffers. It’s certainly on record they got more than a billion out of Meridian for the last two election year budgets.

          It’s rather unlikely that National is going to engage in such a draconian anti business course of action, they have no political constituency like Labour does with the leftist unionists.

    • Clarke 2.3

      The very definition of insanity is to do the same thing over and over again, expecting a different outcome each time.

      So your solution to market failure is … more markets?

    • Draco T Bastard 2.4

      You can’t have competition in electricity supply. You can only have one network because it’s far too expensive to have more than one. Having multiple suppliers increases costs because of the increased bureaucracy and laws. The cost of setting up the competition prevents the competition even trying.

      Do what you say and we will end up with a privately owned monopoly gouging society and not enough power generation. Exactly why Milton Friedman said in Capitalism & Freedom that if you have to have a monopoly then it should be state owned.

      Power is an infrastructural component of society like roads and as such it needs to be state owned. Without it society would be worse off. If the generation and reticulation of power loses money then it can easily be, and should be, regarded as an investment in our society.

      • Swampy 2.4.1

        We have more or less the same in the past because of the state monopoly. A monopoly is a monopoly regardless. That’s why we have laws against monopolies, except of course government ones, and that’s where you have made a huge mistake in your post. The electrical supply network is owned by an independent public entity and that’s the only monopoly that should be tolerated. There’s no case for generation monopoly because it happens at multiple sites. There’s no case at all that going back to an NZED scenario with the local distribution monopolised by MEDs is going to produce an improvement over the current situation. There’s plenty of case that limiting the monopoly power of major players is going to produce real improvement. The situation is that the government owns most of the generation capacity and thus has substantial market power, Further, the government can buy political power as a result. Going back to the past NZED-MED type model will simply cement in the most negative aspects of the current situation.

  3. Chris 3

    Good post.

  4. Chris 4

    Good post – and bang on the nail.

    Getting competition in a small monopolistic market is a false dream. Better to concentrate on real world issues.

  5. Yes very good post Eddie. I was listening to Gerry Brownlee being interviewed on National Radio yesterday evening and I could feel his pain in having to admit that the market solution – Max Bradford’s baby – had been a complete failure.

    It was a great moment hearing him squirm.

  6. Tom Semmens 6

    Surely though one of the lessons of this is that the constant right wing screeching for personal tax cuts will lead to politically driven and undesirable distortions of the tax system. Make no mistake – the government cannot dare raise personal taxation given the way the cheerleaders of the business elites react to such a thing, so instead it is forced to indulge in this sort of unfair and distorting taxation in order to maintain the revenue streams that pay for everything. Right wingers don’t understand there is no such as a free lunch. Or rather, they seem happy to accept that they may have to step over begging old ladies on wintry streets on their way to collect their tax cut.

    The sooner we up the top personal tax rates to the top tiers of earners – and corporates – and cut these sort of unfair and hidden tax burdens on the poorest New Zealanders the better.

    • jagilby 6.1

      “constant right wing screeching for personal tax cuts will lead to politically driven and undesirable distortions of the tax system.”

      I don’t think you could have got it any more wrong if you tried.

      Substitute “right-wing” for ‘left-wing’ and “personal tax cuts” for ‘state welfare’ and you’re starting to get closer to the truth.

      Having the highest personal tax bracket not consistent with that of companies, trusts and other corporate bodies has led to massive undesirable distortions in the tax system.

      Seriously, get a clue.

      • Clarke 6.1.1

        Having the highest personal tax bracket not consistent with that of companies, trusts and other corporate bodies has led to massive undesirable distortions in the tax system.

        Yes, you’re entirely correct – if you can game the tax system by running your income through a company or a trust, then you can pay significantly less tax than anyone stuck on PAYE.

        However this is not normally an option for families on the minimum wage in South Auckland, so effectively provides a mechanism for richer folk to pay less tax than is equitable.

        The solution to this problem is to normalise the tax system, by making all top rates the same. This can just as easily be done by raising trust and company taxes as lowering personal taxes. No prizes for guessing which one will result in a lower deficit.

        • jagilby 6.1.1.1

          Fantastic idea… increase taxes on companies right in the middle of a severe recession.

          Where was your invitation to the jobs summit… that idea would have eradicated unemployment for sure.

      • ak 6.1.2

        Seriously, get a life. And catch up with the new tory lines.

        Repeating the hackneyed pre-election drivel and screeches for “tax cuts” puts you way behind even your own sunny leader. So last year.

        The vote-buying “north of $50/wk” bribe won the election but is now old hat: the reality-forced chewing gum for the rich and zip for the majority (morphing into zip for all henceforth) has taken it off the Keyspeak register for good.

        Ditto your tired”state welfare” refrain. Smell the roses, petal: Sunny has expanded the dole, is pouring hard-earned taxpayers millions into a bike track, and is currently ramming “big government” onto our biggest city. Socialist bastard.

        Take the pills, Gills: you’ve still a sad case of pre-election dysfunction.

        • jagilby 6.1.2.1

          I’m not “screeching” for a cut in taxation revenue at all and never said anything close to that dickhead.

          If anything I would look to rebalance to tax take through capital gains on investment property (aside from the primary home of residence) and those who think they are so smart clipping the property ticket. That would include capital gains on all goods – including Art and collectables memorabilia. And one you’ll all love, I’m sure, I would remove subjective references to “traders” when it comes to taxing capital gains on shares – all trading of shares would be subject to capital gains.

          It’s my belief that a capital gains isn’t quite as tough a pill to swallow politically as it’s made out to be and it would align us with most other developed nations…. even those without “Tory” leaders.

          Yes, I would also increase GST also (so start preparing your vitriol now). Increasing the cost of consumption will encourage an increase savings (the great panacea to our current account deficit according to Labour).

          These two measures would help us lower personal taxes to a level consistent with that of companies and trusts and remove the distortion currently. I trust that the current tax think tank appointed will do justice to these suggestions… thank heavens they have a bit more knowledge and sense when it comes to taxation than you lot.

          ANOTHER POINT…
          “so effectively provides a mechanism for richer folk to pay less tax than is equitable”

          Who is you to decide what is “equitable”…. Is it “equitable” that those who provide the jobs and risk the capital be summarily punished for doing so?

          “However this is not normally an option for families on the minimum wage in South Auckland”… If they had the access to the knowledge why would a family on the minimum wage need to exercise that option anyway?… presumably their marginal tax rate is less than that of a company or trust in any case.

          • jagilby 6.1.2.1.1

            As an aside how can discussion about the structure of the tax system be “so last year” when the government has only just appointed a think tank, that includes New Zealand’s foremost experts on taxation (including members from each of the Big 4 accounting firms) to provide suggestions for reform?

            How can you be so sure this won’t radically change the current structure and that parties will change their stance given these recommendations?

            Pretty ballsy of you I would suggest… or is it just another example of the supreme arrogance of the left again thinking they know better than the experts?

        • jagilby 6.1.2.2

          Forgive me if I don’t see how socialist the Supercity is when all the other socialists in the land are united against it and the proposal will almost certainly result in staff “efficiency” gains.

  7. LawGeek 7

    Labour’s best effort to fix it was the Electricity Commission – a half-hearted effort to stop the generator/retailers from taking super-profits by regulating the market.

    It didn’t work. We didn’t get enough generation and transmission as we needed put in.

    These two statements are mutually contradictory. Transmission price rises are justified as the recovery of costs spent on transmission investment. The EC approval system for investment is designed to STOP unnecessary investment that will drive up cost. Similar logic applies to generation investment.

    Now you can agree or disagree with whether or not more investment than is current approved is needed (althought the NZ transmission system is actually fairly reliable by international standards, I might add), but more investment will = higher electricity prices. Either that, or direct subsidy of the electricity companies from the general tax base. Again, you might think that’s a good idea. But more investment = more costs. It’s very difficult to rationally demand BOTH more investment AND lower prices.

    • Draco T Bastard 7.1

      Actually, it’s not all that difficult at all but it doesn’t work for private investors as they are looking for the return of the original investment plus profit. Works fine for state ownership though as the cost of setting up new generation is taken out taxes as a sunk cost with no direct return needed or even looked for. The price of power would then be the cost of supply and maintenance. The returns that we would get would be the increased efficiencies and living standards of our society which are almost impossible to quantify but would be greater than zero.

      • LawGeek 7.1.1

        The cost isn’t zero either though. You either have to pay back the cost of the investment (paying for it is independent of the profit motive) through electricity charges or out of general taxes.

        Generation and transmission capacity costs money. You might pay less for it in the long run in public ownership (I think that is likely), but you still have to pay for it. I’m not arguing that private ownership is more efficient than public in the electricity sector, I’m arguing that you have to pay for investment somehow, and therefore Eddie’s point doesn’t really make sense. I wouldn’ve thought that’s relatively uncontroversial.

        • insider 7.1.1.1

          LawGeek is exactly right. More investment equals higher charges. Fundamentally becasue there is no game changing technology that lowers the cost base. Most of the green energy is more expensive not less, so you are contradicting yourself.

          What you are arguing for is short run marginal cost. Possibly fine if you have static supply and demand. Alternatively a highly competitive market with very low barriers to entry would get close.

          But how would you incentivise the building of supplementary new plant to meet rising demand unless you do that by ministerial direction or some other centralised planner where the taxpayer wears the risk if it is wrong (and we have plenty of excruciatingly bad examples of that in the recent and distant past – wanna buy a railway anyone? A synfuel plant?). Your proposal to hide it in general taxes is frankly scary and likely to lead to overbuilding due to lack of accountability for decisions. I’d suggest it would be the least efficient.

          Having a market shifts the risk from taxpayers to investors. It also means that we are not subject to the whim of central planners and politicians who decide what is best for us. They will use that power to steamroller over communities because it looks good in an engineering sense but probably only from that perspective, or politically good, which usually means expensive for you and me. What we need is more market not less, and more scrutiny of that market

          • Draco T Bastard 7.1.1.1.1

            But how would you incentivise the building of supplementary new plant to meet rising demand unless you do that by ministerial direction or some other centralised planner where the taxpayer wears the risk if it is wrong (and we have plenty of excruciatingly bad examples of that in the recent and distant past – wanna buy a railway anyone? A synfuel plant?).

            Having a market shifts the risk from taxpayers to investors.

            And we have even more proving that the market doesn’t move the risks from the public to the private. If the infrastructure isn’t built then the public pays in lost living standards, lost earnings and other ways.

            The market will never over build but doing so isn’t actually a failure – it just means you can put off further investment longer but the profits will either be low or non-existent. So, the market is incentivised to under invest to keep prices and profits high in the short term while the state is incentivised to over invest to keep costs down in the long term. Central planning for a single service that is so integral for the wellbeing of society is a massive improvement over market supply of the same service.

            Your proposal to hide it in general taxes…

            Don’t put words in my mouth. I never said to hide it in the taxes and there’s no way I would support any sort of black project that funded through taxes. Pay for it through taxes as an investment in society is what I said and what it actually is.

        • Draco T Bastard 7.1.1.2

          I didn’t say it would cost nothing. I said that the difference is that private investors want their money back and that government can regard the investment as a sunk cost and not expect it back at all. This will lower electricity prices because all that they are covering is maintenance.

          • insider 7.1.1.2.1

            Actually no, the Government requires a return on its assets and are pretty harsh in demanding it – and there are good reasons for this. It needs to know when investment is efficient or inefficient just as much as any private business or else the costs could spiral – they would only feel like they are small because they are hidden and you can’t blame some fat cat.

            Re the above (system won’t let me reply to it directly for some reason)

            “And we have even more proving that the market doesn’t move the risks from the public to the private. If the infrastructure isn’t built then the public pays in lost living standards, lost earnings and other ways.”

            Actually we don’t have that proof. Firstly we have over 4000MW of generation planned – that is 50% of total installed capacity and we are only growing demand at ~2%pa. There have been significant investments since the market was developed.

            Secondly, we have had fewer actual power cuts due to energy shortages than we did under centralised planning. Centralised planning leads to pork barreling IMO o

          • LawGeek 7.1.1.2.2

            Let me put it another way, Draco.

            Power plants cost millions to build. That’s millions of tax dollars that can’t go somewhere else. Either that, or the power company has to cover the costs of its investment through electricity charges. I agree that if the power company is state-owned, there is the possibility for including a lower profit component in those charges. But even if you’re going for break even, which we surely want our Government to do, new investment = new cost = higher charges.

            What are you disputing out of that statement?

  8. burt 8

    Eddie

    Are you are saying that the price gouging over the last 6 years is the fault of National from the 90’s rather than Labour who were in charge over the last 6 years?

    Following this logic Fyffe is indemnified for the Zear360 situation as the problems stem back to the govt when they set up Air NZ in the first place. Going right back to NAC would follow the same logic as blaming National for this.

    Come on Eddie, the directors, shareholders and management team are responsible for stuff that happens on their watch. You cannot continue to blame the National govt of the 90’s for ever Eddie

    • Clarke 8.1

      I agree – Labour should have had the courage to bin a failed market system.

      By the same token, however, Brownlee has just come out and said that the power companies won’t have to pay back the $4 billion they’ve looted from consumers – in effect, he’s endorsed their cynical overcharging.

      Now that’s definitely happening on National’s watch.

      • The Baron 8.1.1

        Did you read why he isn’t clawing it back, or did you not get past the headline?

        I really am worried about the level of reading comprehension on this site.

        • Clarke 8.1.1.1

          You mean Brownlee’s in-depth analysis:

          Speaking on Radio New Zealand Mr Brownlee said refunds were not an option. He pointed out the report looked at the wholesale not the retail market, but also it was too difficult.

          “Most of this happened in the past, it happened over the seven years up to 2007,” he said.

          “The 2008 year hasn’t been part of the assessment. . .you’ve got to remember to that the household sector is just on a third of all electricity use so it becomes very, very difficult to work out who actually has paid for what.”

          So let’s get this straight. The electricity companies have the billing systems that allow them to buy and sell through individual transactions in the wholesale and retail markets, and a regulatory obligations to keep those records for a decade. But it’s “too difficult” to go back through those same records and correct the over-charging, despite the fact that the Commerce Commission has forced exactly the same process on other large-scale corporates that have been guilty of over-charging on transaction fees, such as the recent example of the banks with credit card transactions.

          The only sense in which this is “difficult” is that it would cost pro-privatisation Brownlee some political capital.

          • insider 8.1.1.1.1

            The real reason IMO is the $4b is a bit of a fiction…

            What has happened is that a theoretical model has been built that says in an ideal market if all the conditions in the model were fully conformed with, prices should have been at level X most of teh time, but when he looked at the actual prices they were X+. That gap has been considered an “overcharge” but there is significant debate over whether the model can ever be “true” ie can that ideal ever be achieved in any market ever, meaning the theoretical base could be just that, a theory.

            There are also people questioning whether the model actually effectively replicates the NZ market.

          • Maynard J 8.1.1.1.2

            Insider, if I understand correctly, it would be very easy to figure out who creamed what from whom when.

            The key point is that the highest spot price determines the overall market wholesale price.

            The easiest example to use is that during a dry year, there is not enough hydro, so we burn diesel. This means we are paying for hydro power as if it were diesel. To find out the overcharging, merely determine when the spot prices are for each generation type and unit, and then if the price was ever above that.

  9. The Baron 9

    Far better than your usual partisan hacking, Eddie – good discussion and points.

    Lets consider your premise of repurchasing Contact Energy, so that ECNZ can be reconstituted. Right now, Contact Energy has a market capitalisation of $3.4 billion (source: http://www.nzx.com/markets/NZSX/CEN). This would have to be the starting price of any fair value for the business (a lot more than Cullen’s woefully overpaid train set – my god, I would hate to see him negotiate this deal!)

    Would the reorganisation of the market produce $3.4b in benefit? Arguably, it would have prevented the $4b in overcharging that has just occurred… but nevertheless, it is a hell of a cost.

    • Clarke 9.1

      … which by your own figures would produce a return of $600 million in net economic welfare for New Zealand. To do the numbers, that’s a 17% ROI, not allowing for the time value of the money invested. There’s clearly a very good prima facie business case for doing an immediate re-purchase; I’d suggest a full NPV assessment as a good beginning point, but it seems like a very workable deal.

  10. Natpicker 10

    Theres not much needs to be said after Pascals missive, its right on the money. The whole market concept for utilities is totally flawed, and an exercise in the gathering of safe returns for those that have the money to invest. Which in itself means that the rest of us will have to return a “rental” to these shareholders. They in turn will demand more and more. Time to nationalise.

    In terms of shareholders and investment capital I would encourage high returns if the risk is commensurate, but in the case of existant captive markets there is no real risk. And that is what is so bloody sick, no one with money is inclined to risk it, they only want safe returns from you and me. Its a form of parasitism and it aims at the capture of the common good for the private gain.

  11. Quoth the Raven 11

    I think this is an argument for much more decentralised electricity generation. That way you can get the power companies off your back.

  12. insider 12

    Maynard

    for some reason I can’t reply directly to your post.

    You are almost correct, it is the supply bid that clears the demand that sets teh price. So like an auction people will offer generation at various prices for a set demand. Those offers are stacked on top of each other from lowest to highest. When you get to the point that meets demand, the market is cleared and it is that marginal offer that sets the price that everyone receives even if their offer was lower. So the highest offer is not necessarily accepted. That would only happen when the generation offered exactly matches demand, which is almost never.

    The problem with your solution is that it disincentivses me to offer my generation at near marginal cost, because if I get paid more – which I have no control over – you might sting me down the track. That is absurd and unfair. The only person who should wear that is the marginal generator, but how are they to know they are going to be at the margin? No-one has perfect information and no-one could accurately guess when they were at the margin. It also requires anyone reviewing the market to be perfectly informed about what was bid and why, and what the marginal costs were. And that is really really hard I suspect.

    Like I said, a theoretical view has become reality and it may not actually be so.

  13. Rich 13

    What we need to have is a computer model that optimises which power stations run to minimise CO2 emissions over an annual cycle, while maintaining a reserve of water in case of dry or calm weather.

    The cost of (state-generated) electricity then becomes the cost of generators (fuel, capital, maintenance, overheads) plus a reasonable surplus. Contact and any other privately-held generators can either be paid on the same basis, or can sell power through their own distribution network to any private customers that want to contract with them.

    As well as this, it would make sense to turn the state generators from SOEs into worker/consumer owned cooperatives, so that any profits flow straight back to the customers and workers.

    • The Baron 13.1

      what on earth is a worker/consumer cooperative going to give that an SOE isnt? both return money to the public – just that the former introduces a whole pile of CRAZY along the way.

      I assure you, as a tax payer, i am not going to let one shred of my publicly owned power generation fall into the private hands of the “workers”. i thought you lot hated privatisation – what the hell is this?

      • Quoth the Raven 13.1.1

        The Baron – What is your particular problem with consumer or worker cooperatives? Merely saying something is crazy is not a substative argument. Are you capable of providing a good argument against these models? What is the crazy you talk of? Is it merely that it smells of leftism to you so ipso facto it must be bad – no argument needed.
        I don’t hate privatisation. It is how privatisation is carried out that is the problem. There are many different ways to privatise. Most people don’t have such a black and white picture of the world as you. Market – anti-market, privatisation – state ownership, black – white…

        I assure you, as a tax payer, i am not going to let one shred of my publicly owned power generation fall into the private hands of the “workers’.
        …so you have a problem with it being in the private hands of workers, but you have no problem with it being in the private hands of corporates, or not?

        • The Baron 13.1.1.1

          Fair enough on the first part, QoR – good challenge.

          And on the second, you caught a fair error of mine. I absolutely have no problem with worker ownership of anything – so long as they purchase the asset at fair market value. In fact, I think it would be a beautiful model if more workers did get the capital together and do just that, and actually demonstrate the model to the country.

          I suspect that Rich had something wholly different in mind however, in that he wanted the Government to give the power assets over to worker/consumer control as an alternative to SOE structures. It was that concept that i was railing against, as it privatises the asset without fair recourse to the owners – the collective taxpayers.

          as for your last sentence, i think you have wholly made that up. i don’t think i have ever made any statement for or against privatisation? i share however your own sentiments that you express earlier.

    • insider 13.2

      Rich

      Problem is that could mean more expensive power…

      What you describe is similar to what we have. The system runs on best price first. The ETS or carbon tax was supposed to penalise carbon so pushing carbon dioxide production down the bidding order. But we can’t meet demand with just renewables so need fossil fuels. So any increase to FF costs is a direct cost increase to power purchasers. Not only that, wind tends to be more expensive than gas at present so there is a double whammy.

      I’m not going near debating the wisdom of SOEs becoming co-ops :-)

  14. Swampy 14

    The period under review happens to be entirely a period when Labour was in government and therefore received the control of the billions of dollars into government coffers which they were then able to spend on scratching their usual itches.

    It was most noticeable that Labour ministers at the time when these electricity price rises were taking place, kept very quiet on the subject of where the money was going to. Labour of course did almost nothing to change the electricity marketplace during that time.

    Hardly surprising is it? In 2005, Labour makes certain spending promises in the election campaign. Michael Cullen contrives to extract about a billion dollars from Meridian to pay for some of those promises. That amount being in addition to the normal dividends that are paid out each year to the government as shareholders.

    Just tell us whether you still believe that the billions in overcharging was bad, that Labour should have given that money back in rebates.

  15. Swampy 15

    I don’t know why anyone thinks there is some sort of “good old days” when power was not being overcharged. Before Bradford came along and did his bit, things were pretty much the same, the main difference being that the NZED was run like a typical government department rather than the SOE model.

    There was no choice for the public who they could buy power from, the MEDs used to transfer large sums of money to local government coffers each year such that special legislation was put through by Muldoon to limit the amounts. These things happen when you have a government monopoly.

    What you have missed out here is that the government still owns most of the SOEs implicated in this cartel and therefore has substantial market power. All you need is an SOE minister to tell all three to behave the same way and there is that cartel at work with the resulting outcome.

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  • The Left Triumphant! A Counterfactual History of the Last Twelve Months.
    DID IT REALLY HAVE TO END LIKE THIS? Reading through the commentary threads of the left-wing blogs it is impossible to not feel the anger; the sense of betrayal; the impression of having had something vital ripped from their grasp;...
    The Daily Blog | 26-09
  • GUEST BLOG – Myles Thomas: The media won it!
    Make no mistake, John Key is a clever communicator – reasonable, authoritative and relaxed – but without the media he wouldn’t be PM. Depending on your viewpoint, New Zealand’s news media are either a bunch of Grey Lynn lefties or...
    The Daily Blog | 25-09
  • Not Learning Lessons Past: the West’s Response to IS
    In an earlier posting Ukraine, United Kingdom, Ireland, Scotland, I noted that the first lesson of conflict learned by Robert McNamara was “understand your adversary”. If we have honourable objectives, our first and most important weapon is empathy. In the Vietnam War,...
    The Daily Blog | 25-09
  • GUEST BLOG: Dr Jarrod Gilbert – Proof of David Farrar’s deception: my ...
    In the lead up to the election the Minister of Corrections Anne Tolley launched a gang policy. In order to justify the government’s approach she used gang figures that overstated the gang problem. Not by a little bit, but a...
    The Daily Blog | 25-09
  • SPECIAL FEATURE: Stuart Nash – Red To The Rescue?
    SPECIAL FEATURE by Selwyn Manning. IF THE ELECTION RESULT which was dished out to Labour was not enough to incite an immediate leadership primary, then the caucus’ refusal to recognise David Cunliffe as the leader should cement it. Now is...
    The Daily Blog | 25-09
  • Has the one party state crackdown begun already? Left wing NZ activist grou...
    Well known left wing activist social media group, ‘John Key Has Left Down NZ’ has been shut down on Facebook. At 11.40pm last night, Facebook, without any warning shut the group down siting a breach of terms of service as...
    The Daily Blog | 24-09
  • Why Cunliffe should probably just let Nash & Robertson win
    We have to face some very unpalatable home truths. If you are a left wing political person, best you put your vote now to the Green Party, although you’ll have to do that all the while the Greens frantically tell you...
    The Daily Blog | 24-09
  • The graceless win of Kelvin Davis
    The graceless win of Cameron Slater’s mate in the North, Kelvin Davis is difficult to swallow. Here Cameron Slater’s mate in the North is shitting on Hone Harawira by calling Hone all steam, no hangi as Kelvin rubs his ganged up win into...
    The Daily Blog | 24-09
  • So Labour shifted too far to the left?
    So Labour shifted too far to the left?   Here’s the ill-judged view of Josie Pagani in the Pundit “Labour must change”: “At the last election I made myself a heretic when I wrote a column mentioning how unpopular the...
    The Daily Blog | 24-09
  • Uncomplicated Loyalties: Why Cunliffe and the Labour Left Cannot Win
    THE STORY of David Cunliffe’s leadership of the Labour Party has been one of missed opportunities and unforced errors. That he was the only choice available to those who wanted to rid the Labour Party of its neoliberal cuckoos is...
    The Daily Blog | 24-09
  • So we can expect this now?
    So we can expect this now?...
    The Daily Blog | 23-09
  • Can Labour be saved? Why Whaleoil & National won and why we need a new ...
    As the shock of my optimism that NZers would recoil from the real John Key as exposed by Dirty Politics and mass surveillance duplicities wears off, I am surprised to find that the right in NZ are not content with...
    The Daily Blog | 23-09
  • Three more years (up shit creek and paddling hard)
    “If the future is not green, there is no future. If the future is not you, there is no future”. Emma Thompson’s stirring words to the climate marchers in London last Sunday are worth considering in the aftermath of the...
    The Daily Blog | 23-09
  • One Party State
    In years to come this election will be seen as a historic turning point towards one party rule. I don`t mean this literally, absolute single party dictatorship is not in prospect. In the New Zealand context though, one party has...
    The Daily Blog | 23-09
  • No More. The Left Falls.
    . We cannot be beaten down Because we are down already. We can only rise up and if you should beat us down, We will rise again. And again. And again… And when you tire of beating us down, We...
    The Daily Blog | 23-09
  • Hang tight everyone – Marama Davidson campaign reflection
    To the many people who had expressed their overwhelming support for me to enter Parliament this election – thank you. That the Greens held steady in a big loss for progressive politics is an achievement. We are hopeful that after...
    The Daily Blog | 22-09
  • New flag for NZ once Key signs TPPA
    New flag for NZ once Key signs TPPA...
    The Daily Blog | 22-09
  • Reflecting on Elections Past
    There are a number of past elections that can give the left in New Zealand guidance and hope. Two major points though. Major parties require leaders who can bridge the political divide through strength of personality, vision of what it...
    The Daily Blog | 22-09
  • GUEST BLOG: Kelly Ellis – The Reptile Room
    I stress, at the outset, that I’ve got nothing against reptiles. Some of my best friends are reptiles. Some say I am one, but I’m not really. I just emulate that ability to sit, stationary for hours in court, eyes...
    The Daily Blog | 22-09
  • The success of right-wing counter messaging in the election
    One of the reasons National won the election was due to its success in counter messaging – and the way so many media commentators ran with th the right-wing spin. Here are some examples. Dirty Politics The original message was...
    The Daily Blog | 22-09
  • New Flag competition
    New Flag competition...
    The Daily Blog | 21-09
  • Submissions sought on herbicide for weed control in maize
    The Environmental Protection Authority is calling for submissions on a herbicide to improve broadleaf weed control in maize. The substance CADET contains 100g fluthiacet-methyl in the form of an emulsifiable concentrate and would contain a new active ingredient...
    Scoop politics | 01-10
  • Jesse Mulligan Lives Below Poverty Line
    Jesse Mulligan Lives Below Poverty Line TV personality Jesse Mulligan will live on the equivalent of the extreme poverty line this October in order to raise awareness of sex trafficking. Mulligan will survive on $2.25 for his food from October...
    Scoop politics | 01-10
  • Narratives from the 2014 Election: What do we learn?
    Narratives from the 2014 Election: What do we learn? - Sue Bradford, Russell Brown & Kirk Serpes discuss....
    Scoop politics | 01-10
  • Voices from Oceania to speak out on climate change
    Voices from Oceania to speak out on climate change at launch of Pacific environment report...
    Scoop politics | 01-10
  • Changes to Pacific Tsunami Warning Centre messages
    The Ministry of Civil Defence & Emergency Management advises that while changes to Pacific Tsunami Warning Centre messages come into effect from today (Wednesday 1 October), the Ministry has been, and remains, the authoritative voice for tsunami...
    Scoop politics | 01-10
  • Police remove banner at Statoil Offices in Wellington
    Oil Free Wellington hung a banner at 9:30 this morning at the Statoil office headquarters in Wellington as the Petroleum Summit opened in Auckland. The banner, which read 'Statoil out of Northland: Stop Deep Sea Oil', has now been removed...
    Scoop politics | 01-10
  • Mixed massages raise concerns
    Mixed massages raise concerns for Te Taumata Kaumatua Ngapuhi nui tonu, and Te Wakaminenga O nga Hapu Ngapuhi....
    Scoop politics | 01-10
  • Union Slams Port Boss’s Pay Rise
    The Rail and Maritime Transport Union (RMTU) says Lyttelton Port CEO Peter Davie’s 18% wage rise, taking his pay packet to $1.24m, is unjustified and inflammatory. ‘Lyttelton port has an appalling health and safety record, with three deaths on...
    Scoop politics | 30-09
  • Prisons expert Ron Nikkel to speak in Auckland October 15
    Prison Fellowship NZ and JustSpeak have the privilege of hosting the former president of Prison Fellowship International, Ron Nikkel....
    Scoop politics | 30-09
  • Hundreds of educators protest IES in Rotorua
    Four hundred educators from around the country took their opposition to the Government's controversial Investing in Educational Success policy to the public today....
    Scoop politics | 30-09
  • Crime drops by 3.2 % in the 2013 / 2014 financial year
    Criminal offences dropped by 3.2 % in the last financial year according to figures released today through Statistics New Zealand....
    Scoop politics | 30-09
  • Narratives from the 2014 Election: what do we learn?
    I would like to invite you to a Fabians Reflection on "Dirty Politics, Dotcom and Labour’s worst result" with Colin James, Keith Ng, Stephanie Rodgers and Richard Harman. They will provide a debrief of analysis and lessons from the 2014...
    Scoop politics | 30-09
  • Oil Free Wellington drops banner from Statoil headquarters
    Today members of Oil Free Wellington have targeted the offices of Statoil, by attaching a banner reading 'Statoil out of Northland: Stop Deep Sea Oil' to the entrance of Vodafone on the Quay Midland Park, where Statoil's New Zealand office...
    Scoop politics | 30-09
  • Media Statement from Karen Price
    “After a period of intense media attention and scrutiny of our family, I set up and used an anonymous Twitter account over the weekend and made a number of comments that I deeply regret....
    Scoop politics | 30-09
  • Greenpeace disrupts Simon Bridges’ speech to oil industry
    Greenpeace activists have disrupted the opening speech by Energy and Resources Minister Simon Bridges at the Petroleum Summit in Auckland this morning....
    Scoop politics | 30-09
  • New Zealand Red Cross Responds to Drought in Tonga
    New Zealand Red Cross has sent an aid worker and two desalination units, to turn seawater into safe drinking water in the drought-hit Ha’apai islands of Tonga....
    Scoop politics | 30-09
  • Can you ever tell if an email is real or forged?
    Computer industry veteran Brian Eardley-Wilmot warns that we should never take claims about stolen emails at face value....
    Scoop politics | 30-09
  • NZ MPs to attend the ASPG Annual Conference in Sydney
    New Zealand MPs to attend the Australasian Study of Parliament Group Annual Conference in Sydney...
    Scoop politics | 30-09
  • Independent Maori seats still needed in Parliament
    “He’s got to be joking!” is the reaction of the president of the Maori Party, Rangimarie Naida Glavish to a call by a former Labour Minister of Maori Affairs, Dover Samuels, for debate by Maori on whether the Maori electorates...
    Scoop politics | 30-09
  • Support for Democratic Rights in Hong Kong
    Rallies supporting the rights for universal suffrage will take place all over New Zealand today and tomorrow...
    Scoop politics | 29-09
  • Trout Mass-Poisoned in New Zealand
    Trout Mass-Poisoned in New Zealand The Graf Boys New Zealand has some of the best trout fishing in the world! Every year thousands of international visitors wade pristine rivers in search of the freshwater game fish....
    Scoop politics | 29-09
  • New Zealand’s 2014 Hottest Vegetarians Crowned
    With winter gone things are heating up, and things just got even hotter with the crowning of New Zealand’s hottest vegetarians, says animal advocacy group SAFE. Marking World Vegetarian Day, 1st October, director James Napier Robertson and actor...
    Scoop politics | 29-09
  • A day to remember our duty to look after our senior citizens
    Human Rights Commissioner Dr Jackie Blue says International Day of the Older Person (1 October) is a United Nations day to celebrate our senior citizens, but also acknowledge the need to protect our kaumatua, or older people from abuse and...
    Scoop politics | 29-09
  • Clear data needed on impact of benefit sanctions on children
    A lack of data on benefit sanctions means there is no way of knowing whether welfare reform is helping or harming children, says Child Poverty Action Group....
    Scoop politics | 29-09
  • The socialist alternative to austerity and war
    Public meeting: After the New Zealand election—the socialist alternative to austerity and war By Tom Peters 29 September 2014...
    Scoop politics | 29-09
  • New recruits to boost border protection
    Twenty six new recruits began an intensive nine-week training course in Auckland today that will see them graduate as Customs officers in time for the busy summer season....
    Scoop politics | 29-09
  • Dwindling Mallard population shows up ‘pest’ myth
    The pro hunting organisation Fish & Game is researching the causes of the decline of the mallard duck population, upset at the prospect of fewer ducks to kill....
    Scoop politics | 29-09
  • Support for Democratic Rights in Hong Kong
    New Zealanders in Auckland will gather on Wednesday to support the rights for universal suffrage in Hong Kong....
    Scoop politics | 29-09
  • Campbell Live Exclusive Interview with David Cunliffe
    David Cunliffe resigned as leader of the Labour party on Saturday; but he still wants the top job....
    Scoop politics | 29-09
  • Action needed on cycling safety
    “Clearly we aren't doing enough to protect the 1.5 million New Zealanders who ride bikes,” said Mr Morgan....
    Scoop politics | 29-09
  • World Rivers Day Passes Without A Whimper
    Sunday 28 September was World Rivers Day to celebrate clean, flowing rivers and caring about them. But a recreation-conservation advocacy the Council of Outdoor Recreation Associations of NZ (CORANZ) says the day seems to have slipped by without...
    Scoop politics | 29-09
  • The Kiwifruit Claim: Q&A
    1. Who is running The Kiwifruit Claim? The Kiwifruit Claim was founded by kiwifruit growers representing well in excess of 10% of the industry. 2. Why are you running this claim? The introduction of Psa into New Zealand had devastating...
    Scoop politics | 29-09
  • Fed Farmers Need to Be Weaned
    The Taxpayers’ Union is calling on Federated Farmers to make a firm commitment to reject any future Government funding, after it was revealed that the lobby group had received over $200,000 of payments in recent years....
    Scoop politics | 29-09
  • Children paying the price for charter school stitch up
    New Zealand children will be paying a high price for a one-seat deal between ACT and National, with an expansion of the beleaguered charter school system says education union NZEI Te Riu Roa....
    Scoop politics | 29-09
  • Hikoi From North Reaches Oil Conference Tomorrow
    Today: The Hikoi opposing Statoil plans for seismic testing and deep sea oil drilling has marched through Dargaville and later be welcomed to Piringatahi Marae, West Harbour,Tamaki Makaurau/Auckland....
    Scoop politics | 29-09
  • Communities Still Count
    The efforts of many organisations to influence the electorate and the political parties they voted for in the lead up to the 2014 Election is over. The voting public has spoken and provided a strong endorsement to the centre-right National...
    Scoop politics | 29-09
  • Eleven social enterprises get ready to take off
    Eleven teams from across the country will take part in the Launchpad, Ākina’s programme to get social enterprise ideas off the ground....
    Scoop politics | 29-09
  • An open letter to the Prime Minister
    in which Transparency International New Zealand asks the Prime Minister to ensure integrity underpins all work he leads "in the best interests of all New Zealanders"...
    Scoop politics | 29-09
  • Paula Bennett ‘great work’ acknowledged – McVicar
    “Paula Bennett, as Minister of Social Development, has contributed significantly in lowering our crime rate and preventing further victims.” - McVicar...
    Scoop politics | 29-09
  • Key’s Restraint in Propping up ACT Welcomed
    The Taxpayers’ Union is welcoming the announcement that ACT MP David Seymour will not be appointed as a Minister....
    Scoop politics | 29-09
  • Only Concession is from the Taxpayer
    Responding to the confidence and supply agreement reached between John Key and Peter Dunne’s United Future Party, Taxpayers’ Union Executive Director Jordan Williams says:...
    Scoop politics | 29-09
  • A Tent for Any Tenant
    AUT students and Salvation Army Manukau Community Ministries team up to raise awareness, as South Auckland’s housing situation moves from crisis to collapse...
    Scoop politics | 28-09
  • Cycle Safety Panel Draft Report Seeks Comments
    The Cycle Safety Panel Draft Report and Recommendations was published on 25th September 2014 and the panel are inviting comments. Lucinda Rees from NZ School Speeds, the organisation campaigning for consistent speed limits outside schools, is encouraged...
    Scoop politics | 28-09
  • Labour’s Review – Terms of Reference Agreed
    Labour's Review - Terms of Reference Agreed Following a meeting of its ruling New Zealand Council yesterday, Labour has released the terms of reference for the comprehensive review initiated following its 2014 election result. The review will comprise three...
    Scoop politics | 28-09
  • The final countdown for Kiwi smokers
    There are just two days left until many smokers stubb out their cigarettes for the last time and embark on Stoptober – New Zealand’s first national quit-smoking month....
    Scoop politics | 28-09
  • “In A Democracy People Win And People Lose”
    “In A Democracy People Win And People Lose” – Chris Hipkins Labour Senior Whip I would say to all of the caucus and all of the members let's actually hear the arguments from the people who want to be leader,...
    Scoop politics | 28-09
  • Campaign to make Murder of Unborn ”Safe and Legal”
    The IPPF have launched an international campaign through its 161 affiliates including the New Zealand Family Planning Association [NZFPA] to make the murder of the unborn safe and legal and accepted as a human right. This is an acceleration of...
    Scoop politics | 28-09
  • Grant Robertson Labour leader hopeful on TVNZ Q+A
    “Look I think what we need to be is relevant, clear and consistent with New Zealanders about the Labour Party's values,” said Labour leader hopeful Grant Robertson on TVNZ’s Q+A programme....
    Scoop politics | 28-09
  • Labour Needs to Get House in Order Before Deciding Leader
    Ex Labour party leader and possible repeat contender David Shearer says the Labour Party is going about the post-election period in the wrong way....
    Scoop politics | 28-09
  • Hate merchants at it again with smear tactics
    “It’s disappointing to see the hate merchants at it again with yet another attempt to smear and silence a health professional who’s doing research they disagree with,” says Ian Powell, Executive Director of the Association of Salaried Medical Specialists...
    Scoop politics | 28-09
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