Effects of privatised power

Written By: - Date published: 7:13 am, November 11th, 2014 - 120 comments
Categories: business, capitalism, infrastructure, Privatisation - Tags: , ,

The entirely predictable effects of privatising much of our electricity generation capacity are arriving thick and fast.

Increased prices:
Power price increases revealed – Labour
Sharp rise in Wellington power prices
Power prices to rise again
Power price hike coming soon

Cutting payments to those with home solar generation:
‘Outrage’ at solar power buyback cuts
Buy-back cuts dim solar’s allure
Dark days for solar soldiers

Big pay rises for bosses:
Privatisation sell-off brings big pay rises for energy chiefs

And payouts that used go to the government (to be spent to the benefit of us all) now go to investors in and outside NZ:
Mighty River Power to pay extra dividend
(this despite carrying more than a billion dollars of debt).

So, if you’re a power company CEO or one of the few actual “mum and dad investors” I guess you’re doing fine. For the vast majority of us the Nats have delivered higher prices, smaller social dividends, and a blow to the vital solar energy sector. Brighter future?

(ht you know who you are)

120 comments on “Effects of privatised power”

  1. BM 1

    How about labour proposes to buy back the power companies, cut out all the middle men and then sell power to the population at cost.

    Be a real vote winner.

    • Paul 1.1

      Tr***ing early…

      • BM 1.1.1

        You contribute fuck all Paul.

        • Molly 1.1.1.1

          I don’t know. I appreciate the fact that he catches the tr*lls early, so the rest of us don’t have to.

          The post is quite specific about the ongoing costs to NZers of privatising an essential service, and you didn’t address any of that.

          • BM 1.1.1.1.1

            Yes I did, you buy back the power generators and nationalize the power sector.

            Costs will be basically non-existent for the population if you’re on-selling the power at cost + a bit extra for replacement/new generation.

            You could even use the lure of “free power” to attract overseas manufacturers down to NZ.

            Paul, on the other hand just endlessly whines and moans.

            • RedLogixFormes 1.1.1.1.1.1

              So Key’s asset sales are wrong policy after all?

              • BM

                Personally I’d have preferred to keep the power generation government owned but only if they’re not being used as another vehicle to tax the population.

                Otherwise just sell them and free up the money for other stuff.

                • miravox

                  And were the power generation companies being used as a vehicle to tax the population or is this a new tune, BM?

                  I didn’t have an issue with partial assets sales.

                  [BM 25th Oct 2013]

                  • BM

                    I see positives and negatives to both positions.

                    • miravox

                      But you came out on the side of ‘no problem with asset sales’ , rather than stating a preference to keep them, which means you’ve changed your position or you’re – ahem – not being completely honest now.

                      Which is it?

                    • Coffee Connoisseur

                      A wise man has the ability to change his mind after finding additional information that unseats his original position.
                      A women wise or not simply changes her mind with no apparant rhyme or reason..
                      It is but one of lifes great mysteries. 😉

                  • Tracey

                    OOPS!

                • RedLogixFormes

                  So what changed your mind? (This isn’t a trick question.)

                  • BM

                    I wouldn’t say I’ve changed my mind.

                    I can just see value in selling the power generators as I can see in keeping them.

                    I saw no value I keeping them if the sole purpose was as another form of taxation of the population, if that was the only reason they were an asset than income tax ,gst etc is an asset as well so all you’d need to do is raise those fractionally to offset any drop in tax produced from the power generation profits.

                    The big difference is that you’ve now got billions of dollars worth of coin in the bank that you can then use to grow the pie.

                    On the other side I can see value in keeping the power generation in government hands if they’re not used solely as a tax revenue stream

                    1.) Power should be as cheap as possible; it’s a necessity of life and keeps more money out in the economy working.
                    Also would keep the population happy, real red button issue power prices.

                    2.) It could be used as a bargaining chip to entice businesses to NZ especially since the vast bulk of our generators are clean and green.

                    3.) I’d like to see NZ run more like a business and as you know businesses have costs, losing control of costs such as power and being at the whim of the market doesn’t make very good business sense.

                    • RedLogixFormes

                      Thanks for the answer.

                      What you are saying is not so very far removed from where most socialists are these days – that the economy works best as a mix of public and private ownership.

                      I can see how running a country as a business appeals to you as a model. It’s not all bad and it’s a way of thinking most people are familiar with.

                      The main downside with the corporate model is that it’s inherently totalitarian – top down rule with very little accountability to the staff.

                    • BM

                      Depends if you look at the population as share holders instead of just staff.

                      Haven’t heard of too many businesses that give the staff the opportunity to vote out the CEO every three years.

                    • Draco T Bastard

                      The big difference is that you’ve now got billions of dollars worth of coin in the bank that you can then use to grow the pie.

                      Billions of digital 1s and 0s that weren’t actually needed to grow the pie. If the government had actually been serious about growing the pie they would have created those same billions and spent it into the economy.

                      1.) Power should be as cheap as possible; it’s a necessity of life and keeps more money out in the economy working.

                      That’s what makes it essential to keeping power, telecommunications and water as state monopolies.

                      2.) It could be used as a bargaining chip to entice businesses to NZ especially since the vast bulk of our generators are clean and green.

                      We have no need of foreign businesses here. No country does.

                      3.) I’d like to see NZ run more like a business and as you know businesses have costs, losing control of costs such as power and being at the whim of the market doesn’t make very good business sense.

                      NZ has been run as a business for the last 30 years and it’s what’s causing the increasing poverty and the destruction of our society. It’s also amusing to note your contradiction at the end there.

                    • RedLogixFormes

                      Yes it would ok if the people were treated as shareholders. Have a look at this presentation. On almost every measure the shareholders (ie capital) have been doing better than labour (the staff) for a many decades.

                      Of course this is sort of where the model breaks down; New Zealanders aren’t just staff, shareholders or customers in a giant business.

                      Haven’t heard of too many businesses that give the staff the opportunity to vote out the CEO every three years.

                      Businesses are a vital and valid component of a functioning society – but why they should not be mistaken for the whole of it.

            • mickysavage 1.1.1.1.1.2

              You are beginning to sound like a Socialist BM.

              • BM

                Maybe I am?

                I’ve never been one for labels, though.

                • Tracey

                  uncritically parrotting slogans, but draws the line at labels…

                • “labels” are required for classifying things into rationally defensible categories. I can see why you’re not into it. 😉

                  • Coffee Connoisseur

                    Lables are required by those who cannot free their mind from the bounds of the current system. It is especially prevalent in politics.
                    You must be a socialist
                    you must be a Capitalist
                    You must be a libertarian
                    You must be whatever category I need you to be put into so I can dismiss your argument rather than simply discussing the merits of it.

                    And you wonder why the system is the way it is…

                  • Coffee Connoisseur

                    Lables are required by those who cannot free their mind from the bounds of the current system. It is especially prevalent in politics.
                    You must be a socialist
                    you must be a Capitalist
                    You must be a libertarian
                    You must be whatever category I need you to be put into so I can dismiss your argument rather than simply discussing the merits of it.

                    And you wonder why the system is the way it is…

        • Tracey 1.1.1.2

          Pot, meet Kettle

      • minarch 1.1.2

        Overtime ?

  2. philj 2

    xox
    Paul +1
    BM -1
    Your on the wrong site BM. Whaleoil is where your friends are.

    • Coffee Connoisseur 2.1

      Yes having an echo chamber for the ideas of the left is a far better idea. That way you get to feel great and positive about things for three years until the next election at which time your again left scratching your head and looking for answers.

      • scotty 2.1.1

        Clever example of a hypocrite ‘labeling and dismissing arguments’ there CC
        very clever

        • Coffee Connoissuer 2.1.1.1

          “xox
          Paul +1
          BM -1
          Your on the wrong site BM. Whaleoil is where your friends are.”

          I’m sorry Scotty I must have missed the argument Philj was trying to make. The only thing I took from it was that dissenting views are not welcome…

          If that’s the thinking here, it explains a lot.
          The left needs help, unfortunately the egos on the left often get in the way.

          Contrast that with RedLogixFormes responses to BM.

          • McFlock 2.1.1.1.1

            dissenting views are fine. commenters argue all the time.

            As long as they are considered, honest, and not blatantly hypocritical.

    • Murray Rawshark 2.2

      He may be on the wrong site, but I agree with him that power should be run by the government and sold at cost. Cost of course includes the cost of replacement equipment. Both the big parties were quite keen to make a nice quid off power, until NAct decided to just sell it. Someone else will now be making an even nicer quid, but Labour played a significant hand in the prices getting to where they are.

  3. Whateva next? 3

    Assets were sold in UK many years ago, is there any reason the results will be different here? No?
    Could NZers have looked up and seen the headlines in UK talking about power price crisis BEFORE voting in this golf club government in again. Nats even use the same tactics has Tories, promising little tax cuts just before election,(and what a debate that was) and taking far more than ever given back in other ways, and yet the sheeple fall for it, EVERYTIME

  4. Mr Nobody 4

    “Cutting payments to those with home solar generation”
    Why should Power Company’s be subsidizing a competitors product?

    If Solar owners aren’t happy with the rates that they’re being offered they’re not being forced to sell the electricity they generate.

    • mickysavage 4.1

      Because renewable power is vital and subsidising solar will help it grow. Otherwise we will just burn more Huntly coal. Weighing up Meridian’s profitability and the need to reduce greenhouse gas production and deciding what should be preferred should be a no brainer.

      Clear example where the market gives the wrong result and a little bit of inspired Central Government guidance can achieve a lot of good.

      • Mr Nobody 4.1.1

        “Because renewable power is vital”
        Renewable power is not vital. It may be preferable (which is my belief) however it isn’t vital.

        “Subsidising solar will help it grow”
        Agreed but where should that subsidy be coming from?
        Should Private Company’s be forced to purchase goods/services whether they want them or not and at a price dictated to by the seller?

        If a subsidy was to occur then personally I would much rather that be made direct from the Government and payment for it made directly from the taxpayer.

        • framu 4.1.1.1

          should private generators of electricity be forced to sell at a price dictated by the buyer? – and at a price that is different to other generators?

          and renewable power is vital – the clue is in the name “renewable”.

          what happens to “non renewable” sources of fuel?

          • Mr Nobody 4.1.1.1.1

            ‘Should private generators of electricity be forced to sell at a price dictated by the buyer?’
            Not at all, neither party should be forced. If private generators don’t like the rate that they’re being offered they don’t need to sell their product.

            “and at a price that is different to other generators?”
            The price between different generators doesn’t matter, at the end of the day either the producer is happy with the rate they are offered for their product or they aren’t.

            “and renewable power is vital”
            No they’re not, simply saying they are doesn’t make it so. If we mankind consumed all of the coal they could swap to oil, if they consumed all the oil they could swap to nuclear, if they consumed all the uranium they could swap to something else, etc etc.

            Yes long term if we want to maintain of current standard of living/electricity driven world then renewables are the correct path forward, however equally as a species we choose (either directly or through in action) that we are happy to revert to a medieval/stone age standard of living that too is a completely valid choice.

            • framu 4.1.1.1.1.1

              “Not at all, neither party should be forced. ”

              ok – so if you dont have batteries and have a grid tie in system how do you stop the power your generating going back into the grid

              cmon smarty pants – less bullshit, more answers

              “Yes long term if we want to maintain of current standard of living/electricity driven world then renewables are the correct path forward, however equally as a species we choose (either directly or through in action) that we are happy to revert to a medieval/stone age standard of living that too is a completely valid choice.”

              thanks for proving me and others right re: renewables. Because reverting to medieval/stone age carries some very fucking obvious problems.

              note: the swearing is for the utter cave man level of intellect your putting into these comments. I dont think for a second your actually that thick

              • mpledger

                They could give their excess to their neighbour directly through a power cord on the home side of both meters. As long as they can nail down an agreement/metering arrangement then it’s win-win – the sol-gen can charge more, the neighbours pay way less.

            • miravox 4.1.1.1.1.2

              If we mankind consumed all of the coal they could swap to oil

              If we used up all the coal our carbon energy society probably wouldn’t be around to use up all the oil.

              That’s what makes renewable power vital, not the economic comparability of the various non-renewable options.

              • Draco T Bastard

                If we were doing what’s economic we’d be dropping fossil fuels ASAP and going to renewables. We aren’t though, what we’re doing is what’s financially beneficial for the 1% and this is going to destroy our society.

            • Nic the NZer 4.1.1.1.1.3

              Many problems with your prognosis there, Mr Nobody.

              The target of 2 degrees of climate change is considered safe. (Currently 1 degree since industrialization).
              Man has access to roughly 5x the conventional oil to create 2 degrees of climate change today. If we burn anywhere near all that the climate change effects will be both disastrous.

              Given our current markets and regulations however this is the result of energy generation in New Zealand and many countries. This has nothing to do with natural market principals either, we don’t presently make energy producers pay (very much) for the pollution they produce, they certainly don’t pay the costs. Obviously there is both mandate, and need to re-structure the energy market to the extent that it doesn’t produce the result its presently producing.

              Maybe that involves a minimum price for buy-back (especially as the resellers have all the power in this market) maybe a carbon pollution tax or a combination. There is no reason we need to accept the outcome of the present market as this is entirely in the hands of the regulators of the market to control.

            • Murray Rawshark 4.1.1.1.1.4

              400+ ppm. Your argument is invalid.

              As for solar entering the grid, the bloody power supply should be run by the state anyway. Given AGW, the state subsidising solar is an intelligent decision. Leave the coal in the ground and get the bodies out.

        • One Anonymous Bloke 4.1.1.2

          So, your best idea is to socialise the losses and privatise the profits. Ignore market failure and the cartel-like actions of the power companies.

          So far so cognitive dissonance.

        • DoublePlus Good 4.1.1.3

          See, the thing about non-renewable power is you can’t renew it. It’s right there in the name. Renewable power is vital by definition, because…you can renew it.

      • Draco T Bastard 4.1.2

        and subsidising solar will help it grow.

        It’s not a subsidy.

      • alwyn 4.1.3

        Why on earth should we burn more Huntly coal in this case?
        If Meridian are forced to buy power from people who have installed little solar power units at a much higher price than the other power they use their costs, and therefore the price they will need to charge for their power when sold to the final consumer, will have to rise.
        People who don’t want to subsidise the very expensive solar power producers will switch to other generating companies who will charge them less.
        I believe that the total production by Meridian is renewable, and essentially non-polluting power. It is all produced from Hydro or Wind sources. If they are forced to buy Solar power from the faddist generators at very high prices it will simply replace other renewable energy, not replace power from coal stations. Increasing the costs to Meridian are likely to lead to more, not less generation from coal fired stations.

        • One Anonymous Bloke 4.1.3.1

          “very high prices” [citation needed]

          Compared to what, by whom?

          • alwyn 4.1.3.1.1

            I suppose you can refuse to believe statements by Meridian if you like but this is what they said
            “Mark Binns CEO of Meridian just made this statement flagging the fact that they are about to change the feed in tarrif and approach to solar: “Binns warned also that Meridian is about to get more commercially hard-nosed about its solar power generation offering, saying the company has 70 percent of the New Zealand residential solar market. “As we move forward we have to balance our commitment to support solar customers in a way that is also commercially sustainable for Meridian. We will be reviewing our tariffs in this segment over the coming year to reflect this aim.” Solar was not economically viable in New Zealand, being three to four times more expensive than electricity generated at a windfarm, and only ever capable of producing a small proportion of total electricity demand, even if we had “one million kiwi homes” generating their own electricity. “Using the International Energy Agency numbers and assuming equipment and installation costs fall year-on-year by 5 percent annually, it will be no earlier than 2035 and probably 2045 before solar at utility scale becomes competitive with other renewable options in New Zealand – at current prices!” said Binns. “We believe solar remains an important part of the renewable energy solution for New Zealand, but is not a likely game changer for generators and retailers but it will raise some interesting questions around how lines companies recover their costs.”

            Note the critical words he used “three or four times more expensive than a windfarm”. I am prepared to believe he knows his business and is unlikely to have grossly exaggerated his claims

            I’m not sure what the date of the item is but the estimate from the wind energy association says 6.5 cents to 10 cents for wind generation which is much less than the 25 cents for solar.
            http://www.windenergy.org.nz/the-cost-of-wind-energy

            • One Anonymous Bloke 4.1.3.1.1.1

              Meridian’s commercial sustainability’s at risk? Perhaps that’s because their CEO has trouble deciding between “three” and “four”.

              I don’t suppose he’s inflated “three” or “four” for any reason. Say “to get more commercially hard-nosed”, for example.

              Struggling shareholders need those dividends after all.

            • framu 4.1.3.1.1.2

              if the issue is the purchase price the retailer is offering, isnt the question

              “is the unit cost that meridian is forcing on residential generators of a comparable nature to the unit cost paid to large generators for units generated at the same time of day, regardless of method of generation?”

              binns is diverting by talking about cost of generation instead of cost to supply

              im pretty sure residential solar generators arent that worried about cost of generation once they are up and running

              • alwyn

                I’m not quite sure what you mean, but I’ll try and comment.

                I think Binns is warning residential generators that they aren’t going to get higher amounts paid than would alternative suppliers just because they spent more on the generation equipment. They should consider this before they install the equipment.

                Meridian own their generation capacity and probably only buy in power at the margin. I imagine that the unit cost they would have to pay some other generator would be similar to their own marginal cost of production, which would be in the 6-10 cent range. At the moment they are paying, for solar power, 25 cents which is far above that figure. They are proposing to cut this to a fixed 7 cents in summer and 10 cents in winter, or there about.

                I don’t really think that the small domestic producers would be happy with instantaneous spot pricing for their power fed back into the grid, any more than a domestic consumer would be happy with their household power being supplied at the spot prices for large users.

                I’m in agreement that a residential generator isn’t to worried about the cost of generation. They have spent the money and they can’t get it back. It is going to depreciate at the same rate whether they use it or not. On the other hand new generators, who may think they can pay for their own power by selling the excess at a high tariff should , and are, be made aware that the price that they get is not going to be higher than alternatives.
                It should be noted that it is only new suppliers who are going to receive the lower rate.

                • framu

                  “Meridian own their generation capacity ”

                  ahh – that explains some of what binns is saying i guess

                  but it kinds screws the system a wee bit – if you own both retailer and generator.

                  and what i mean is that the amount paid per unit should be of a comparable nature regardless of who generated it.

                  eg: “At the moment they are paying, for solar power, 25 cents which is far above that figure. They are proposing to cut this to a fixed 7 cents in summer and 10 cents in winter, or there about.” – is that the same price for all forms of generation?

                  but yes – installing solar without asking and answering such issues is somewhat foolish

                  • alwyn

                    Oh yes, Meridian own their generation and, as they say here on their company website, it is 100% renewable. They produce from hydro and wind power. They have said that the numbers they are switching to, the 7c and 10c values, are comparable to any other form of generation. ie the average spot prices.
                    http://www.meridianenergy.co.nz/about-us/
                    They are also the major (70%) purchaser of solar generated power that is fed back into the grid.

            • Draco T Bastard 4.1.3.1.1.3

              The most important part of that passage from Mark Binns is that he admits, indirectly, that commercial imperatives are bad for the country.

        • Draco T Bastard 4.1.3.2

          Solar Continues Trumping Fossil Fuel Pricing, With More Innovations To Come

          Solar and other renewables are always cheaper than fossil fuel because they don’t use up the scarce resources as burning them does. The fact that you and many others still think that fossil fuels are cheaper is part of the delusion caused by our financial system.

    • David H 4.2

      If Solar owners aren’t happy with the rates that they’re being offered they’re not being forced to sell the electricity they generate.

      So what are they supposed to do with the excess they generate??? Oh I know they can sell it to…. WHO????? Come on tell all. And how is it that they are supposedly subsidising a competitors product???? The people with Solar are selling at a cheap rate and it’s resold for a profit. The Power companies are just wanting more power for Fark all, so they can payout even more obscene salary packs for some clown who does fuck all. FFS even Bullshite Man is a better class of Troll.

      • Mr Nobody 4.2.1

        David if you have a vegetable garden and grow more vegetables than you need should the grocery stores have to purchase your excess vegetables and should they have to purchase it at the rate you demand?

        • mickysavage 4.2.1.1

          If you were helping to save the world’s environment from the worst excesses of climate change why not?

          • BM 4.2.1.1.1

            You strike me as more of a green than a labour guy MS.

          • Mr Nobody 4.2.1.1.2

            So the as long as its for “saving the world’s environment” its okay to take away people rights of individual choice.

            Are there other causes we force people to act?
            Who sets the causes that take away ?
            If you disagree with the cause should you have to participate in the “response” as well?

            • One Anonymous Bloke 4.2.1.1.2.1

              Which “individuals” are being stripped of “choice”. Certainly not the majority shareholders.

              No, wait, sorry: my bad.

              You mean you’re concerned about the impact on the ability of the strong to smash the weak.

            • framu 4.2.1.1.2.2

              “Are there other causes we force people to act?”

              yes – every day. Its called society

              let me guess – your a property rights above all else type of guy arent you

          • David H 4.2.1.1.3

            Not only that Micky but home grown Vege’s do taste that much better No chemicals trying to be all natural here. So yes MR Nobody, I should be able to demand a premium price for a premium product/Vege. Why not?

        • framu 4.2.1.2

          thats got to be the dumbest comparison ive ever heard

          you can pull a veg out of the ground and do anything with it – you cant do the same for power.

          • Mr Nobody 4.2.1.2.1

            No what you can do is invest in battery banks that will store your excess power for your later use.

            The problem is that many of the households that have installed solar systems have chosen to invest in a system that generates a capacity that exceeds their requirements with the belief that they could reduce their expense (and long term profit) by selling that excess power back to the grid.

            Now that the power company’s have chosen that they no longer prepared to pay the original fee they can see that return on investment shrinking and that isn’t anybody’s problem but theirs.

            • One Anonymous Bloke 4.2.1.2.1.1

              Certainly the current system is rigged against citizens in favour of corporations, which is odd, since the citizens are the majority shareholders.

              It’s almost as though the minority shareholders own the National Party or something.

              …he said I’m doubling the rent ‘cos the building’s condemned,
              You’re gonna help me buy City Hall,
              But we can,
              You know we can…

            • framu 4.2.1.2.1.2

              so nothing like growing vegetables then

              but getting back to your original poorly thought out premise

              “ok – so if you dont have batteries and have a grid tie in system how do you stop the power your generating going back into the grid?”

              and what happens when your batteries are full?

              and how is generating and storing or transmitting power in any way even close to food production?

              your arguing for generators who are breaking a virtual monopoly to be at the mercy of said virtual monopoly!

              • Mr Nobody

                Not at all framu,

                If I grow excessive vegetables I have the choice to either:
                A) give it away
                – I could do the same with my solar power by running cables to those I want to give it to (a tad expensive though).

                B) store them, this may need me to build a root cellar, dry store etc
                – I can do this with my power by building battery banks

                C) Sell it to a distributor
                – I can do this with my solar power

                D) Sell it directly via a shop or stall at the end of the driveway
                – Again I can choose to do this with my power however again setup the infrastructure is a bit expensive

                E) Let them rot and go to waste
                – I can do this with my power

                If you want to put in Solar systems good for you. However thats your choice. If you want to sell your excess power thats good too, however its my choice how much I’m prepared to pay for it so don’t whinge like cry baby if I’m not prepared to pay what you want you can choose not to sell it to me.

                • framu

                  you go and chuck some of your power in the green waste

                  you still cant answer the question

                  “so if you dont have batteries and have a grid tie in system how do you stop the power your generating going back into the grid?”
                  and what happens when your batteries are full?”

                  generating, storing and distributing power is nothing like growing vegetables and fruit

                  im not whinging like a cry baby – im asking for some logic and intelligence from you – so far its in the same place as your mythical units of power that you seem to think can be checked out or carried about in a box

                  • Mr Nobody

                    From the reading I’ve done it seems that most Hybrid Solar system function in both an on/off grid role and automatically manages any excess generated power either by storing it in battery banks, selling it back to the grid or discharging it. If you want details of how precisely these work I would suggest you contact their manufacturers.

                    Unfortunately if you’ve invested in a cheaper technology such as the “pure” on grid solutions that limits your ability to properly manage your resource it sounds like you’ve made a poor choice.

                  • Murray Rawshark

                    “Whinging like a baby” is about all the RWNJs can come up with when you point out how ridiculous their arguments are. The fact that this nonentity has already mentioned being forced to do things and then tries to compare everything to a vege garden makes me think he’s drunk on Koch bros. snake oil. It’s very typical – spend all your intellectual capital understanding radishes and carrots, then frame everything else in that context. It’s why we have private power companies – because it doesn’t make sense to have the state selling radishes. Wow. Brilliant!

                • RedLogixFormes

                  From an engineering perspective NZ is ideally set up for re-newables.

                  When the sun shines or wind blows you simply reduce flows through the hydro stations. Effectively using the lakes as giant batteries.

                  By setting up all the generators as competing entities you really don’t capture that synergy effectively. Otherwise known as market failure.

                  • Draco T Bastard

                    +1

                    That’s it exactly and what the free-marketeers either fail to understand or lie about. Mostly I think it’s a failure of understanding but I’m sure a few understand the efficiencies produced by having a single intelligent power grid but having that single power grid breaks the potential of massive unearned profit.

                    • weka

                      Surely the point is to make money not be efficient or fair.

                      You are much more generous than I. I don’t think it’s failure to understand, I think it’s intentional greed.

                    • Draco T Bastard

                      Oh, in the upper levels of National and the corporations it most definitely is pure greed but at the lower levels it’s just ignorance and belief in what they’ve been taught and what they’ve been taught is wrong.

        • andrew murray 4.2.1.3

          The obvious nonsense in your comment is that the green grocer has no legislative capacity to either restrict your capacity to produce, nor can they restrict who you sell your production to… neither of these freedoms are available to power consumers as private power producers

          • One Anonymous Bloke 4.2.1.3.1

            Looks like Mr. Nobody doesn’t recognise the concept of market failure, even when it’s right there in front of him.

          • alwyn 4.2.1.3.2

            Of course the private power producers can avoid selling their power to the existing generating companies.
            They can, if they want to, set up a co-operative to sell the surplus power generated as a generating company in competition with Meridian. If there are people who want to buy it they can do so. To give them the price they believe they are entitled to the power will probably be twice the price the existing companies charge of course. Would you deal with this co-op?
            In practice of course they wouldn’t survive. The bulk of the excess solar power people generate, and expect to have Meridian et al take of their hands, is only available during the day in summer. The peak of the demand in New Zealand is in the evening during winter. If you do deal with this co-op you are going to have to accept that you won’t be able to have any power in your house when you really want it.

            • One Anonymous Bloke 4.2.1.3.2.1

              Sure, because that’s how the Information and Trading System works in the wholesale market, eh. You sure know your stuff, Alwyn.

              No, wait…

            • framu 4.2.1.3.2.2

              but shouldnt the price be derived from the costs of supplying said power in relation to other generators?

              not a figure decided by the retailers who have vastly more leverage in negotiations?

            • Draco T Bastard 4.2.1.3.2.3

              The bulk of the excess solar power people generate, and expect to have Meridian et al take of their hands, is only available during the day in summer. The peak of the demand in New Zealand is in the evening during winter. If you do deal with this co-op you are going to have to accept that you won’t be able to have any power in your house when you really want it.

              What a load of bollocks. Having solar power in summer means that the hydro lakes don’t get used as much and are therefore more available in winter. The power companies should be lining up to buy that solar power.

              • alwyn

                The Hydro lakes aren’t really as flexible in their storage as one might imagine.
                The biggest lake is Te Anau at 352 sq kms. It’s normal operating range is between 201.5m and 202.7m above sea level. The can go outside that range but I don’t think it would ever reach 204m.
                The last six months are shown here
                http://www.meridianenergy.co.nz/about-us/generating-energy/lake-levels-and-snow-storage/te-anau/
                The other lakes are similar and have reasonably strict minimum and maximum levels. Manapouri is between 176.8m and 178.6m. Ohau is between 519.45m and 520.4m, at which point it goes over the weir.
                You can’t just store the water for a long period and just use it in winter. The inflows are such that the level can rise to the maximum, and have to be released quite quickly.
                The amount of power generated at present wouldn’t make that much difference to the hydro usage. It is the increase in people who want to join the gravy train that is bothering the power companies. They would rather warn them now than have them expect their purchasing power at very high fees to continue.

                • Draco T Bastard

                  You can’t just store the water for a long period and just use it in winter.

                  Then you shut down fossil fuel systems as they are the most expensive in real terms.

                  It is the increase in people who want to join the gravy train that is bothering the power companies.

                  The people wanting to get onto the gravy train are the power companies as they pay very little for the solar power generated electricity from retail users who they then sell back that power to at a profit. As you point out above there is no solar power generated at night and so the retail users must pay the full 25c per unit essentially for power that they have generated.

        • Tracey 4.2.1.4

          Can you explain how the 30m to subsidise Rio Tinto fits into your general reasoning?

          • One Anonymous Bloke 4.2.1.4.1

            Wingnuts have a get-out clause for that: “I don’t support that particular policy but I think the government is moving in the right direction overall”: they use it here all the time.

          • Mr Nobody 4.2.1.4.2

            Hi Tracey,

            I’ll be honest and say that I’ve not really looked into the Rio Tinto deal to any great degree so my understanding is pretty much that:
            – Rio Tinito was threatening to pack up and leave if they didn’t get a new or larger subsidy
            – This threat was believed to be largely empty
            – The Government agreed to a $30 Mil subsidy to keep them in NZ as the region where they’re located would be financially hit very hard if they did leave.

            Based on that understanding:
            I don’t believe the Government should be subsidising private companies. If they are unable to survive without subsidies they shouldn’t survive at all.

            In this particular case I would like to see the analysis on how “real” Rio’s threat was and the financial analysis what the impact was if they were to pull out would be.

            • framu 4.2.1.4.2.1

              rio tinto was always going to close down tiwai pt and there was no requirement to retain jobs written into the deal

            • One Anonymous Bloke 4.2.1.4.2.2

              No, you have it the wrong way around: private companies own the National Party, which would not survive without them.

              • Mr Nobody

                About as much as Unions and Communists own the Labour party.

                [lprent: put some indication of /sarc in the comment. Otherwise I could ban you as an idiot troll. Yes we do get them saying things like that. ]

                • One Anonymous Bloke

                  You can’t get much more explicit than the way the Prime Minister goes about his business, Sky City insider trading, endorsing products all over the shop – I so enjoyed David Wong Tung’s thinly veiled contempt the other day – Cabinet Club, Lusk’s indiscreet verbal incontinence.

                  There’s quite a list.

                  Then there’s the test of “ownership”, which in practical terms means “how does policy get made?”

                  How does policy get made in the National Party, Mr. Nobody?

                  • Mr Nobody

                    If you would like to know how the National Party forms policy I would suggest you ask them or at least a member.

                    I presume though the same way most political parties form policy, through the sacrificing of of a virgin and bathing in their blood while communing with their dark lords. [/sarc]

                    • One Anonymous Bloke

                      Um, yeah, as I said, You can’t get much more explicit than the way the Prime Minister goes about his business.

            • Tracey 4.2.1.4.2.3

              did it change who you voted for?

        • RedLogixFormes 4.2.1.5

          You need to look up the definition of a monopsony.

    • Draco T Bastard 4.3

      Why should Power Company’s be subsidizing a competitors product?

      Actually, its: Why should power companies be making a profit from work and investment that they don’t do? That’s called bludging but you RWNJs probably just see such exploitation as a great way to get rich.

      If Solar owners aren’t happy with the rates that they’re being offered they’re not being forced to sell the electricity they generate.

      Actually, they are due to costs and laws regarding large battery installations. And, here’s the thing – it’s actually better for the country that they do sell the power generated back to the grid.

    • sir pat 4.4

      we contribute to the power supply…..often in excess of what we use….in effect SAVING the power co’s millions in having to upgrade infrastructure so this subsidy bollox is just that bollox!!!……they just want to make sure the profit stays with them period…….is it a subsidy when they offer power to you?

      • Mr Nobody 4.4.1

        “we contribute to the power supply…..often in excess of what we use….in effect SAVING the power co’s millions in having to upgrade infrastructure so this subsidy bollox is just that bollox!!”

        I doubt that you and your household are saving the Power company’s millions. More like mere dollars and even collectively all the Solar Owners are unlikely to saving millions considering Power. Once they do however then they will be in a better position to negotiate a higher rate however until then you can either accept the rate, negotiate a better rate, withhold your power or whine about how unfair it is.

        “is it a subsidy when they offer power to you?”
        No its a service I choose to take advantage of.

        If I didn’t like the service/amount that they were selling their service for I would make alternative arrangements.

  5. Sabine 5

    Yes, for the Nats the future is brighter. They sold our assets and delivered the cash cow. That was the intended outcome and they delivered.

  6. RedLogixFormes 6

    So know we know asset sales of power companies have cost ordinary New Zealanders and delivered worse outcomes.

    Will the media ignore this story?

    Will the media repeat the govts carefully manufactured spin?

    Will Labour ignore the story?

    If Labour do run with it, will the media blame them for higher power prices?

    Will this all translate into an increased support for John Key?

  7. paddy 7

    Labour should simply say that the power stations of NZ were built and paid for by the people of NZ and should be owned by the people of NZ. It’s that simple. I am not one for no compensation but I would only pay out what the shares were sold for and not what they are at now. They can keep the dividends they have banked but there should be no profit at the expense of the people.

    • One Anonymous Bloke 7.1

      Electricity Industry Reform Act 1998

      Purpose
      (1) The purpose of this Act is to better ensure—
      (a) that costs and prices in the electricity industry are subject to sustained downward pressure; and
      (b) that the benefits of efficient electricity pricing flow through to all classes of consumers; and
      (c) new investment in generation from renewable energy sources.

      My emphases.

      Right wing policy failure, (yet) again.

      I’m for no compensation, unless it’s paid to the people of New Zealand, who I’m sure will be generous enough to settle for lower power prices instead.

      • RedLogixFormes 7.1.1

        As Sabine above points out – the policy has been a runaway success OAB.

        • One Anonymous Bloke 7.1.1.1

          Yes. The government may not be too enthusiastic about defending it on those terms.

          QC: “…if it please the court, it is our position that the government’s owners have done very well out of the policy…”

          • RedLogixFormes 7.1.1.1.1

            It will never get to court –

            • One Anonymous Bloke 7.1.1.1.1.1

              The court of public opinion. Your remarks at 6 notwithstanding, the OP is chocka with MSM stories on the subject.

              • RedLogixFormes

                I don’t see the media drawing a fat crayon line between the dots though.

                There is nothing new here. They ignored this story which is the most salient and conclusive answer to asset sales we could ever get.

                Yet NZ happily re-elected a government ideologically committed to more to them. We’ve seen the same bizarre effect in the US mid-terms – people voting for a party that is least likely to implement the very policies the same people actually want.

                What is going on here?

  8. NZJester 8

    They are making high profits as it is and still want to increase the prices?
    It is pure profiteering with the National government winking at them and saying now boys you can’t do that.

  9. Jepenseque 9

    Hmm this debate become ideological so fast – a pity.

    Worked in the energy industry a while back so feel a little qualified to comment.

    Solar buyback – should have happened long ago, solar owners have been enjoying a nice subsidy for a while now. One key point is that they still are subsidised.. The low user tariff allows grid access for a mere 35c a day, well below costs. This as originally designed didn’t envisage solar buyers topping up from the grid but they do heavily benefit from this well below cost recovery. So shouldn’t complain too much.

    Power prices have largely risen fue to regulated lines coy increases. Comcom recent decsions should lead to lower lines charges next year that should filter to retail prices. Likewise with transpower charges. In short the good news is that I think power prices will be below inflation in coming years.

    Cheers

  10. Jepenseque 10

    By the way the EA runs an excellent data sharing website with some cool dashboards at http://www.emi.ea.govt.nz

  11. A voter 11

    If the power sell off was truly democratic we would all have shares as consumers as we pay the money to support these corporate wheeler dealers, without it there would be no pay for these ………
    Corruption to the max

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