Of all the reaction to the Labour / Greens electricity proposals so far, this endorsement analysis has been by far the most significant:
Labour-Greens plan could work, says Vector CEO
The electricity policy announced by the Labour and Green parties could be made to work and the current debate is overly emotive, says the chief executive of the regulated monopoly electricity and gas network owner, Vector.
Overly emotive – do you suppose he’s referring to National’s nonsense about communists?
Simon Mackenzie told BusinessDesk he was encouraged by the fact the proposed central purchaser system would incentivise commercially rational investment in energy efficiency, and that the Opposition parties were not pursuing direct subsidies.
He also welcomed the fact Labour was proposing to simplify regulation of lines companies, which has become enmeshed in the courts after policies Labour implemented was “not tracking as was intended,” Mackenzie said.
There was “no perfect model” for electricity systems, and other countries used similar methods to set prices and to procure investment in new power plants as demand rises. At present, new generation is procured by competing generators identifying the “next least-cost” of new generation and deciding to build it. …
“There’s competition for providing that next plant,” said Mackenzie, who stressed he was “not taking political sides.”
“The model is used in other jurisdictions. It has its pros and cons. It’s made to work.”
Given the fact that the state purchaser model is working fine in other countries and in states of the USA, and given this analysis from one of NZ’s ultimate industry insiders, the Nats are going to have to come up with much more rational counterarguments than ranting about communists and the 1970s.
For an excellent roundup of other reactions see the amazingly thorough Bryce Edwards. Opinions in support:
The model is not only workable, writes No Right Turn, but is in use in Canada and the EU, specifically to reign in excess profits in systems where the market has failed to do so – see: Fixing the electricity market. And there’s some support for this view from experts and advocates. Energy analyst Simon Terry says single buyer models are common overseas, and they work – see RNZ’s Large power users reject single buyer plan. This view is shared by Victoria University’s Geoff Bertram: ‘It’s precisely the sort of thing you need to do to stop the relentless rise of power prices ahead of inflation’ and by both Consumer NZ and Grey Power – see TVNZ’s Labour and the Green’s electricity plan commended.
Opinions opposed consists of a fair bit of squealing business folk. Well they would, wouldn’t they. Because this policy isn’t for them. It’s for the roughly one quarter of Kiwi families that are living with fuel poverty due in part to the ever rising prices of the failed market model.
(Post updated at the request of Vector)