This COVID era is the decade in which the state is back, bigger and faster than ever before. But the one area this government won’t let the state expand again is the one area in which New Zealand is the most vulnerable: electricity generation. It needs to change.
At the end of July this year I commented:
Over the last fortnight, France and the UK have already renationalised energy companies, ready for greater political oversight from impending massive energy disruption.
The UK government has also started to put in place a windfall tax against petroleum companies.
Germany had signalled that it was ready to renationalise, and then did so.
While the Prime Ministership of Boris Johnson was falling apart, Britain’s government passed a law to fully accelerate their energy security strategy. Once you get past the spin, it’s substantial.”
The new Prime Minister of the United Kingdom Liz Truss has indicated today that one of her top three priorities is going to be controlling energy prices to consumers.
I will take action this week to deal with energy bills and to secure our future energy supply.”
She knows winter is coming, so she is going to generate greater and greater control over electricity markets.
This New Zealand government, based on no specific plan or electoral mandate, has in the course of just one calendar year renationalised the entire health system, centralised public television and radio, pulled in all property management from school boards, nationalised tertiary trade education, bought back the remaining local bank into state ownership, and is on its way to amalgamating all water entities into four with much greater state governance control and high regulation.
It is also clear that money is simply no barrier to this government to make these moves: if they want it they will print it.
The outstanding exception to increased direct state control is in electricity. Why?
Instead of taking active control of electricity generators beyond the 51% shareholding and their exceptionally distant governance instruments, it prefers to subsidise customers rather than control. Wave after wave of taxpayer cash gone in short term bills rather than long term assets that generate whole policy benefits. The outrageous short-termism has to stop.
It is in electricity alone that we have had the most acute market failures; last year in the big August blackout, and successively in Auckland by Vector the lines company since 2015.
Since the state is clearly so confident that it sees its role in direct control of so many areas of our lives, why is it missing from state control of electricity? What greater market failure do they need?
We do not need to rehearse here the current regulatory instruments available. They are frighteningly complex as MBIE discovered last year.
Indeed as winter slowly grinds past us into the storms of spring, New Zealand’s brittle, thin and uneven renewable energy system is highly vulnerable to being knocked out by the whims of the climate: smash out a wind farm, disable a dam, knock regional feeds out, and our increasingly electricity-reliant country is in a world of pain.
Climate violence is to our energy system when Russia is to Europe’s energy system.
Consider this recent comment from European Commission President Ursula von der Leyden in May during a visit to the Danish port of Esbjerg used by top wind turbine makers Vestas and Siemens:
The more interdependent we become in Europe, the more independent we will become from Russia,” she said. “We all know green power generation is great. But if you really want to use it, you need a grid, and there we have to step up.”
New Zealand’s threat is not from Russia but from major weather events that take out key generators and lines.
We need the renationalisation of our key electricity generators far more than many of the governments’ other nationalisation moves.
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