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.