web analytics

Asset values, power prices and regulation

Written By: - Date published: 9:03 pm, April 29th, 2013 - 11 comments
Categories: uncategorized - Tags:

Geoff Bertram states in today’s DomPost (repeated on interest.co.nz) that he advised the Select Committee on the Mighty River Power sale legislation that the excessive profits gained by the power companies were potentially subject to regulatory interest by any government that placed consumer interest ahead of the companies’ interests. The Government and the companies cannot say they were not warned.

Bertram says:

So how big is the regulatory risk facing the electricity generators? Suppose a New Zealand government regulates the big generator-retailers.

The first decision would be how much of the companies’ declared book values would be allowed to stand. A US regulator would aim for a write-down to historic cost; a British one would settle for indexed historic cost (that is, they would allow regulated asset values to have risen with the consumer price index since the assets were “vested” in the new companies).

Bertram proposed a regulatory regime based around historic cost and progressive pricing. Further detail about the way asset revaluations have been calculated and used  by the companies to gain income and increase prices are  in this paper  delivered by Geoff Bertram to a Fabian Society seminar in Wellington a few weeks ago.

Also in today’s DomPost, Lewis Evans, an Professor of Economics at Victoria University, attacks the Labour/Greens plan on the basis that government revenue will fall so household taxes may need to be increased by $280. The billions of tax cuts dished out by National to very wealthy households should be able to take care of that.

Lewis Evans features regularly in the so-called Institute for Competition and Regulation. The substance of his article is also on their website here. The ISCR is an incorporated Society attached to Victoria University and funded by Telecom, Meridian Energy, Powerco, Contact Energy, Fonterra and Westpac. Unsurprisingly, the Institute is not known for its enthusiasm for either competition or regulation.

11 comments on “Asset values, power prices and regulation”

  1. Logie97 1

    Dennis Skinner in House of Parliament -10 minutes in talks about Thatcher’s deregulation and the “Shareholding democracy”. deja-vu …

  2. geoff 2

    Fantastic article, this Geoff Bertram is the business. If only his article could get the same coverage as all the robber baron ones that are trying desperately to make some shit cling to the NZ POwer policy.

    [lprent: helps if you leave a link. Oh I see that you did link on another comment. ]

    • geoff 2.1

      Lprent: the link I was referring to was the one Mike Smith has in his article (which also happens to be the one I linked to that other comment.

      • lprent 2.1.1

        Yeah sorry about that. I actually moderate backwards in time across the comments. I get occasional screwups from it. But usually it is the most effective way to look at what people are actually saying (which is what I moderate on) rather than looking at why they said it.

  3. Shaz 3

    Funny that the prospectus does not mention this risk of inflated values and excessive profits even though these were made clear by Geoff in the Select Committee process.

    Funny also how the prospectus talks about technology changes as a risk but does not make clear the risk of domestic scale photovoltaics to an industry based on massive scale generation remote from the site of delivery. The domestic scale photovoltaics industry is booming internationally and even the government’s own website promotes them as , a cost effective answer to domestic electricity supply.
    http://www.smarterhomes.org.nz/energy/generating-your-own-electricity/photovoltaic-cells/

    Funny how all the assumptions in the prospectus assume a steady state situation for financial forecasting relative to all of the risks.

    and funny how MRP’s internal reports and the reports of finance companies on MRP are not available to the general public and even funnier that the people who were not allowed to release those reports are now able to comment freely on the new Labour/Green policy.

    Hmm!

    • DH 3.1

      “Funny also how the prospectus talks about technology changes as a risk but does not make clear the risk of domestic scale photovoltaics to an industry based on massive scale generation remote from the site of delivery.

      To be honest I doubt they see it as a threat, I’ve seen their research and their costings are about 5yrs out of date. They also use the highest price suppliers as a reference.

      NZ is totally backwards when it comes to PV, I’ve been trying to educate the crew here at the TS and it’s a hard sell. The Greens are obsessed with wind and no-one can tell them it’s too expensive.

      The Aussies have installed PV grid-tie systems on over 750,000 homes now and Kiwis still think it’s exotic and unproven. That many installed here would make up 20% of domestic power consumption.

      “The domestic scale photovoltaics industry is booming internationally and even the government’s own website promotes them as , a cost effective answer to domestic electricity supply.”

      http://www.smarterhomes.org.nz/energy/generating-your-own-electricity/photovoltaic-cells/

      They’re miles out of date too, look at their costings;

      “PV systems can be expensive. According to EECA, a 2kW grid-connected system will cost between $13,500 and $26,500 to install. ”

      An importer can land all the hardware for that exact system for under $3,000 now. Installation costs bugger-all, it’s an easy job.

      They’re also way out on generation figures;

      “According to the Energy Efficiency and Conservation Authority (EECA), a 1kW system could be expected to produce between 2.5 and 5 kWh per day – or between 880kWh and 1750kWh per year. ”

      You won’t get 1750kWh in NZ, typical is around 1000-1300. There’s a mass of hard data available on solar generation, I don’t know why there’s so much confusion or arguments over it. You can download historical generation data from over 45 schools here, nearly all have identical 2kW PV grid-tie systems installed.

      http://www.schoolgen.co.nz/

      I expect NZ will sit around with finger up ass and one day the price of PV panels will go back up again. It’s what this country seems to do best.

      • Colonial Viper 3.1.1

        Man, this PV stuff is so good you should be out there making a killing with your PV business.

        • DH 3.1.1.1

          Nope. I’ve pretty much lost interest because there’s too many negative dicks like you in this country. All you do is whine and knock other people’s ideas.

        • Shaz 3.1.1.2

          Thanks DH. and Colonail Viper – you are being idiotic. In addition to DH’s information. Germany has a billion dollar industry employing thousands in PV kick started by government support. The issue is that the electricity industry here (for many reasons) is operating on old models that are not preparing NZ for the Smart Grid failing completely to take advantage of natural strengths.

      • geoff 3.1.2

        DH: I thought the problem with PV is that the power companies give you shitty deals with the grid-tie power you produce?

        • Shaz 3.1.2.1

          Yes at the moment. Another good reason for having a single purchaser allowing small producers a look in 😉

Recent Comments

Recent Posts

  • Next steps in Criminal Cases Review Commission announced
    Justice Minister Andrew Little and New Zealand First MP Darroch Ball, have today announced the appointment of the Chief Commissioner of the Criminal Cases Review Commission (CCRC), the location, and the membership of the Establishment Advisory Group. Colin Carruthers QC has been appointed Chief Commissioner of the CCRC for an ...
    BeehiveBy beehive.govt.nz
    48 mins ago
  • Horticultural Ahuwhenua Trophy finalists announced
    Māori Development Minister Hon Nanaia Mahuta and Agriculture Minister Hon Damien O’Connor co-announced the first horticultural finalists for the Ahuwhenua Trophy celebrating excellence in the Māori agricultural sector.  The three finalists are Ngai Tukairangi Trust from Mt Maunganui, Otama Marere Trust from Tauranga, and Hineora Orchard Te Kaha 15B Ahuwhenua ...
    BeehiveBy beehive.govt.nz
    1 hour ago
  • New support for students with dyslexia
    A new kete of resources to strengthen support for students with dyslexia will provide extra tools for the new Learning Support Coordinators (LSCs) as they start in schools, Associate Education Minister Tracey Martin announced today. The Minister launched the kete in Wellington this morning, at the first of three induction ...
    BeehiveBy beehive.govt.nz
    1 hour ago
  • Rental reforms progress to select committee stage
    The Government continues to make progress on a fairer and more secure rental market for renters and landlords with the First Reading of the Residential Tenancies Amendment Bill and its referral to the Social Services and Community Select Committee.  “Now is the opportunity for landlords, tenants and others who want ...
    BeehiveBy beehive.govt.nz
    21 hours ago
  • Papua New Guinea Prime Minister to visit New Zealand
    Papua New Guinea’s Prime Minister Hon James Marape will visit New Zealand from 21-25 February, Prime Minister Jacinda Ardern announced today. “New Zealand and Papua New Guinea have a warm and friendly relationship. I look forward to welcoming Prime Minister Marape here and strengthening the relationship between our two countries,” ...
    BeehiveBy beehive.govt.nz
    23 hours ago
  • Free school lunches served up to thousands
    Thousands of children have begun receiving a free lunch on every day of the school week, Prime Minister Jacinda Ardern said. The Government’s free and healthy school lunch programme is under way for 7,000 students at 31 schools in Hawke’s Bay / Tairāwhiti and Bay of Plenty / Waiariki, extending ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • Social Wellbeing Agency replaces Social Investment Agency with new approach
    The Minister for Social Development Carmel Sepuloni today announced a new approach that continues to broaden the Government’s social sector focus from a narrow, investment approach to one centred on people and wellbeing. Minister Sepuloni said redefining the previous approach to social investment by combining science, data and lived experience ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • Government to strengthen protections for whistleblowers
    The Government is strengthening the Protected Disclosures Act to provide better protection for whistle blowers, Minister of State Services Chris Hipkins said today. “The Protected Disclosures Act is meant to encourage people to speak up about serious wrongdoing in the workplace and protect them from losing their jobs or being ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • PM speech at Parliamentary Chinese New Year celebration 2020
    Nǐn hǎo (Hello in Mandarin). Xīn Nián Kuài Lè (Happy New Year in Mandarin) Néi Hóu (Hello in Cantonese). Sun Nin Fai Lok (Happy New Year in Cantonese) Tēnā koutou, tēnā koutou, tēnā koutou katoa. Thank you for your invitation to attend this celebration today. I would like to acknowledge ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • IPANZ Annual Address
    Kia ora. Ngā mihi nui ki a koutou katoa. Nau mai haere mai ki te Whare Pāremata. E ngā mana whenua ki tēnei rohe Taranaki Whānui, Te Upoko o Te Ika, Ngāti Toa Rangatira, Ngāti Raukawa – kei te mihi, kei te mihi, kei te mihi. E ngā mana, e ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • 2020 IPANZ Annual Address
    Kia ora. Ngā mihi nui ki a koutou katoa. Nau mai haere mai ki te Whare Pāremata. E ngā mana whenua ki tēnei rohe Taranaki Whānui, Te Upoko o Te Ika, Ngāti Toa Rangatira, Ngāti Raukawa – kei te mihi, kei te mihi, kei te mihi. E ngā mana, e ngā ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Tougher penalties for gun crime a step closer
    Tougher penalties for gun crime are a step closer with the passage of firearms reform legislation through another stage in Parliament. The Arms Legislation Bill has tonight passed its Second Reading. “The changes have one objective - to prevent firearms falling into the wrong hands,” said Police Minister Stuart Nash. ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Arms Legislation Bill: Second Reading
    Introduction Mr Speaker We all know why we are here today. It has been a long journey. The journey did not actually begin on 15 March 2019. It began on 30 June 1997. Almost 23 years ago, Justice Sir Thomas Thorp told us what was wrong with our firearms legislation. ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • New era for vocational education
    The Government’s work to put trades and vocational education back on the agenda took another major step forward today with the passing of the Education (Vocational Education and Training Reform) Amendment Bill, Education Minister Chris Hipkins said. “This is a watershed day for trades and vocational education. These law changes formalise ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Bill to Amend the Greater Christchurch Regeneration Act
    Speeding up the return of Christchurch regeneration activities to local leadership is behind the Greater Christchurch Regeneration Amendment Bill introduced to Parliament today by Minister Megan Woods. “As we approach nine years since the February 2011 earthquake in Canterbury, and with the transition to local leadership well underway, the time ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Milford Track to partly reopen after storm damage
    Hundreds of New Zealanders and international visitors will be able to get back out into nature with the Milford Track partially reopening next week, after extensive assessments and repairs, the Minister of Conservation Eugenie Sage announced today. The popular Great Walk has been closed since 3 February after an extreme ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government drives low-emissions transport momentum
    Up to 110 new EV chargers nationwide in cities and regions 50 electric vehicles for ride-sharing The Government is helping deliver more infrastructure and options for low emissions transport through new projects, Energy and Resources Minister Dr Megan Woods says. Tauranga, Nelson, Levin, New Plymouth and Oamaru are just some ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Kiwis better off under Coalition Government
    New Zealanders are increasingly better off under this Government as wages rise and families have more disposable income, Finance Minister Grant Robertson says. Stats NZ reported today that average household disposable incomes after housing costs rose 4.9% in 2019. This was the highest rise in four years and came as ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Another step towards restoring rights for screen production workers
    All New Zealanders need to have their voices heard at work to ensure we have an inclusive and productive economy. Today we introduce a Bill to do this for workers in the New Zealand screen industry, Workplace Relations and Safety Minister Iain Lees-Galloway says. “The Screen Industry Workers Bill will ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Enhanced Taskforce Green for Southland and South Otago
    The Government has announced further help for the Southland and Otago regions to speed up recovery efforts from the floods.  “I’ve approved Enhanced Taskforce Green (ETFG), making $500,000 available to help with the clean-up in Fiordland, Southland, and the Clutha district in Otago,” Minister for Social Development Carmel Sepuloni said.  ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Employers and Industry take the lead to connect students to vocational education
    Following the announcement that more than 340 schools will be funded to run events promoting vocational education, the Government has announced it will fund a further 257 events to be run by employers and industry. “These industry-run events will allow more than 30,000 students to connect with more than 2,000 ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Rental reforms a step closer with the introduction of the Residential Tenancies Amendment Bill
    Today the Government is making progress on a fairer and more secure rental market for renters and landlords with the introduction of the Residential Tenancies Amendment Bill in Parliament.  “This Bill includes a series of reforms to improve the wellbeing of the 609,700 households that live in rented homes, and ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Biosecurity Minister announces world first eradication of pea weevil
    A Government programme to wipe out pea weevil has achieved a world first, with Biosecurity Minister Damien O’Connor today announcing the successful eradication of the noxious pest from Wairarapa. This means the nearly four-year ban on pea plants and pea straw was lifted today. Commercial and home gardeners can again grow ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Temporary Accommodation Service activated for Southland flooding
    Southland residents hit by flooding caused by heavy rainfall can now access help finding temporary accommodation with the Government activating the Temporary Accommodation Service, Minister of Civil Defence Peeni Henare announced today. “The Temporary Accommodation Service (TAS) has been activated by the Ministry of Business, Innovation and Employment to help ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Bridges: Over-hyped and under-delivered
    “Is that it?” That’s Finance Minister Grant Robertson’s response to Simon Bridges’ much-hyped economic speech today. “Simon Bridges just gave the most over-hyped and under-delivered speech that I can remember during my time in politics,” Grant Robertson said. “It’s not surprising. Simon Bridges literally said on the radio this morning ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Police to trial eye in the sky in Christchurch
    A trial deployment of the Police Eagle helicopter in Christchurch will test whether the aircraft would make a significant difference to crime prevention and community safety. “The Bell 429 helicopter will be based in Christchurch for five weeks, from 17 February to 20 March,” said Police Minister Stuart Nash. “The ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Momentum of trade talks continues with visits to promote Pacific and Middle East links
    The Government has kept up the pace of its work to promote New Zealand’s trade interests and diversify our export markets, with visits to Fiji and the United Arab Emirates (UAE) by Trade and Export Growth Minister David Parker. Building momentum to bring the PACER Plus trade and development agreement ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Coalition Govt’s investment in Customs nets record drugs haul: 3 tonnes stopped at borders in 2019
    The Coalition Government’s investment in a strong border and disrupting transnational organised crime produced record results for stopping drugs in 2019, says Minister of Customs Jenny Salesa. The illegal drugs were seized at the New Zealand border by Customs, and overseas by Customs’ international border partners before the drugs could ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Separated scenic cycleway starts
    Transport Minister Phil Twyford today kicked off construction of a separated cycleway alongside Tamaki Drive. A two-way separated cycleway will be built along the northern side of Tamaki Drive, between the Quay Street Cycleway extension and Ngapipi Road. There will be a separate walking path alongside. Phil Twyford said giving ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Earthquake-Prone Building loan scheme: eligibility criteria announced
    Owner-occupiers of unit and apartments living in earthquake-prone buildings will have certainty about the financial support they’ll be eligible for with the release of criteria for an upcoming assistance scheme, Minister for Building and Construction Jenny Salesa says. The Residential Earthquake-Prone Building Financial Assistance Scheme will help unit owners facing ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Travel restrictions to remain in place as coronavirus precaution
    Temporary restrictions on travel from China will remain in place as a precautionary measure to protect against the spread of the COVID-19 coronavirus. The restrictions which prevent foreign nationals travelling from, or transiting through, mainland China from entering New Zealand have been extended for a further 8 days. This position ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Over $1 million to help Tairāwhiti youth into employment
    Employment Minister Willie Jackson announced today that Tairāwhiti rangatahi will benefit from an investment made by the Government’s He Poutama Rangatahi (HPR) scheme. The funding will go to the Tautua Village, Kauneke programme and the Matapuna Supported Employment Programme which will fund 120 rangatahi over two years. “Both programmes work ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • School attendance has to improve
    All parents and caregivers need to ensure that their children go to school unless they are sick, Associate Education Minister Tracey Martin said today. “The school attendance results for 2019 show, across the board, a drop in the number of students going to school regularly,” the Minister says. “Apart from ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Crown and Moriori sign a Deed of Settlement
    A Deed of Settlement agreeing redress for historical Treaty claims has been signed by the Crown and Moriori at Kōpinga Marae on Rēkohu (Chatham Islands) today, Minister for Treaty of Waitangi Negotiations Andrew Little has announced. Moriori have a tradition of peace that extends back over 600 years. This settlement ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Waikato Expressway driving towards completion
    Transport Minister Phil Twyford today with Māori King Tuheitia Pōtatau Te Wherowhero VII officially opened the country’s newest road, the $384 million Huntly section of the Waikato Expressway. The 15km four-lane highway with side and central safety barriers takes State Highway 1 east of Huntly town, across lowlands and streams ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • 3400 New Zealanders treated in first year of new hepatitis C treatment
    The rapid uptake of life-saving new hepatitis C medicine Maviret since it was funded by PHARMAC a year ago means the elimination of the deadly disease from this country is a realistic goal, Health Minister David Clark says. Hepatitis C is a blood-borne virus which attacks the liver, proving fatal ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Kaupapa Māori approach for homelessness
      Kaupapa Māori will underpin the Government’s new plan to deal with homelessness announced by the Prime Minister in Auckland this morning. “Māori are massively overrepresented among people experiencing homelessness, so, to achieve different outcomes for Māori, we have to do things very differently,” says the Minister of Māori Development ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government steps up action to prevent homelessness
    1000 new transitional housing places delivered by end of year to reduce demand for emergency motel accommodation. Introduce 25% of income payment, after 7 days, for those in emergency motel accommodation to bring in line with other forms of accommodation support. Over $70m extra to programmes that prevents those at ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Important step for new financial conduct regime
    Clear requirements for ensuring customers are treated fairly by banks, insurers and other financial service providers are included in new financial conduct legislation that passed its first reading today. “The recent reviews, by the Financial Markets Authority (FMA) and Reserve Bank of New Zealand, into the conduct of banks and ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Applications invited for $7 million Regional Culture and Heritage Fund
    Applications are now open for the fifth round of the Regional Culture and Heritage Fund Associate Minister for Arts, Culture and Heritage Grant Robertson announced today.   “I am delighted to open this year’s fund which has some $7 million available to support performing arts venues, galleries, museums and whare ...
    BeehiveBy beehive.govt.nz
    1 week ago