State asset for sale

Written By: - Date published: 8:30 am, December 21st, 2010 - 39 comments
Categories: national, privatisation - Tags: ,

We’re very pleased to have another guest post from Labour’s Dunedin North candidate, David Clark:

Whirinaki power plant is up for sale.

Energy Minister Gerry Brownlee has waited, until after the year-end press gallery drinks, to announce this state-owned asset will be sold by tender process.

Marty G has already pointed out that this sale and the issuing of bonds by Genesis, are state-asset sales by stealth.

Technically the company is not being sold. What we’re witnessing is commonly known as “asset-stripping”. Feel better?

So what are we losing? By kicking in when electricity prices hit a threshold, Whirinaki sets an effective cap on the price of electricity. Basically, it stops power prices rising to unaffordable levels – meaning beneficiaries and pensioners don’t freeze to death when power crises strike in the winter.

Whirinaki is New Zealand’s only true standby power station. It was built in response to power crises in 2001 and 2003. As a “generator of last resort”, it was opened in 2004 to generate power in an emergency.

Whirinaki is a state-asset, owned by the Crown and temporarily managed by Contact – that was scheduled for transfer into full state control by Meridian in October 2010.

Why has the Government now decided to sell it? And why did it announce this decision just 8 days before Christmas?

The answer to the first question is National’s privatisation agenda. The answer to the second question is that John Key doesn’t want media asking the first question.

If Whirinaki is sold, power prices will rise. The market that doesn’t work – will charge more for power. And the most vulnerable will suffer.

Add to that the fact that a fossil-fuelled plant might be transferred from an emergency generating role to an everyday one. The government should be backing out of diesel – not mainstreaming it.

The Government talks about having our interests at heart, but the truth is that it is selling off the family silver again. And slippery John Key is doing it while we’re focussed on Christmas.

Before the election, John Key promised not to sell Kiwibank. Next he said they’d look at it. Finally, he said it wouldn’t happen while he was PM. Flip – Flop – Flip again. National have said there’d be no state asset sell-offs in the first term of a National Government. But they’re already finding ways of gutting our companies now. Watch out for major sell-offs if they get into power again (excuse the pun).

Whirinaki looks and feels like a state asset. It even smells like a state asset. But at Whirinaki something stinks.

David Clark

39 comments on “State asset for sale ”

  1. r0b 1

    National are in enough trouble already over the electricity industry. They set up the current “competitive” system that was supposed to lower prices, but instead has raised them. And now this? Remove a tool for setting a cap on prices? What are they thinking?

    • Draco T Bastard 1.1

      What are they thinking?

      More ways to transfer more of our wealth to themselves and their rich mates. It certainly isn’t about what’s best for NZ as everything they do is contrary to that.

  2. Bunji 2

    Excellent post David.

    Will the media pick up on it? Asset sales by any other name still smell as rotten…

  3. tc 3

    Quite r0b and the fatmans tinkering has laid more unecessary costs on to Meridian/Genesis to shuffle power stations that is passed on to the consumer for absolutely no improvement in the grid/power generation etc on top of his facical ‘choice’ in the retail space initiative.

    Shortsighted with nothing but a negative impact on prices and surety of supply…..Gerry’s enjoying his time with that wrecking ball of his whatever next.

  4. Jared 4

    Take your hand off it and look at the bigger picture. Its a reserve plant, like the Marsden B plant that afaik (which has never actually been used for generation). It is a generation of last resort, and its sale was not only recommended by the Commission, but Meridian have said they don’t need it any longer.

    If anything, spot price buyers MIGHT hurt, i.e the big energy users. However, what will most likely happen is a big energy user will buy the plant, and relocate it for private generation and to feed back into the grid. I.e one of the Fonterra Plants, or the Mills (Glenbrook or Kinleith). But, lets not forget its a dirty and inefficient way to generate energy, that you know, we don’t actually need. We have additional generation coming on line at Otahuhu and with Wind Farm development.

    • @ Jared, the point is that it is currently employed as a reserve plant in the country’s interest. Currently it is not operated for private gain.

      I expect Meridian doesn’t want it because it doesn’t sit well with their ‘brand’. That is fine. It could easily be transferred to another generator and the unnecessary bureaucratic costs of running a tender process could be avoided. Instead, it’ll be sold off cheaply to a business that will use less electricity from the grid. The business will then reduce its participation in generating the electricity SOE returns that effectively fund our schools and hospitals.

      In addition it’s likely to be run more often, generating Kyoto (and subsequent agreement) costs that under National’s ETS are born disproportionately by the taxpayer.

      Benefits are privatised. Costs are socialised. Sound familiar?

      • factchecker 4.1.1

        David – a plant can still be employed as a reserve plant owned by a SOE or (shock horror) a private generator and be operated in the country’s interest. Huntly is a reserve generator owned by the government, run commercially and in the country’s interest.

        David – IF a business bought Whirinaki and then used it (which I think is highly unlikely given it runs on diesel or gas, both of which are expensive – much more efficient for a business to buy from the electricity market through hedging), that would probably be good for the country because it would reduce load on the grid and reduce demand.

        It is ridiculous to say it will be run more often. The economics of Whirinaki dictate it will hardly be run at all, because the cost of running it is expensive.

        Re your “costs are socialised” point, under the previous market arrangements, the costs of electricity companies’ poor planning were socialised (by the reserve energy scheme and the operation of Whirinaki). That is no longer the case.

        • Colonial Viper 4.1.1.1

          It is ridiculous to say it will be run more often. The economics of Whirinaki dictate it will hardly be run at all, because the cost of running it is expensive.

          In that case how would a private company come up with a business case which makes purchasing Whirinaki at all worthwhile? Whats in it for them?

          that would probably be good for the country because it would reduce load on the grid and reduce demand.

          Sorry mate you can’t have it both ways and still be correct. You just said that it would hardly be used by the private company because of the economics. And then you say that it would probably be good for the country as turning it on will reduce the private company’s load on the grid.

          What you’ve actually inferred is simple: the reserve capacity will be taken off the grid, Whirinaki will hardly ever be used by the private company and the private company will still rely on the grid.

          Bottom line is that reserve generation capacity builds resilience into the system. It prevents small demand shocks from causing massive economic damage. Taking this reserve capacity out of public hands is a bad bad idea.

          • factchecker 4.1.1.1.1

            Colonial – No contradiction. I said “IF” a business bought it, which I find doubtful, that would probably be good for the country because it would act as a form of distributed/local generation, reducing pressure on the national grid. But as I said, that’s pretty unlikely I think because it doesn’t make much sense economically. But if someone can make it work, then all power to them.

            I agree reserve generation builds resilience into the system. It’s a good thing. Current market participants have a good incentive to build and own reserve capacity, which is why a current participant will probably buy it.

            The leap you make – “taking this reserve capacity out of public hands” is illogical and incorrect. First, because there’s every chance the plant will stay in public hands through being bought by a SOE, and second, because as long as the plant is in the system, who cares who owns it?

          • Jared 4.1.1.1.2

            Any private business will frame their case around surety of supply, and consistent pricing rather than relying on the spot market. But lets be clear, this isn’t about the private sector poaching a ripe investment that can’t be easily be replicated. As in the case of Todd Energy who are building a similar plant in New Plymouth, the energy sector isn’t as fucked as you are making it out to be.

            • Colonial Viper 4.1.1.1.2.1

              the energy sector isn’t as fucked as you are making it out to be.

              well I agree with you there, because various players are making a frak tonne of money off consumers, and able to pay dozens of execs >$100K p.a. 🙄

          • Swampy 4.1.1.1.3

            They strip out the turbines and sell them on for some other use.

        • Draco T Bastard 4.1.1.2

          The economics of Whirinaki dictate it will hardly be run at all, because the cost of running it is expensive.

          Actually, the economics dictate that it’s used 24/7 so that it’s actually got an income, and thus a profit, coming in at all times. No private business will allow that plant to be turned off.

          • factchecker 4.1.1.2.1

            Draco – it’s not a plant that is designed to be run 24/7. You are incorrect.

            • Draco T Bastard 4.1.1.2.1.1

              What’s that got to do with it? Businesses do not leave assets lying around unused as it costs money (even an unused machine needs maintenance).

          • Swampy 4.1.1.2.2

            More likely the economics dictate it is dismantled and sold for other uses.

  5. factchecker 5

    Whoever wrote this post has no idea about how the electricity industry works. A few points.

    1. The plant is being sold on the open market. If Genesis Energy buys it (a SOE), will it still be privatisation? If Mighty River Power (a SOE) buys it, will it be privatisation? Of course not. For that matter, say it had been transferred to Meridian as planned, and they then sold it overseas – would that be privatisation? Of course not. SOEs buy and sell “assets” all the time. Meridian bought a hydro company in Australia in the mid 2000s and then sold it later for a vast profit. Apparently that is “privatisation”.

    2. Whirinaki was indeed a “stand-by” generator, but it was a pretty poor one and one that an expert review of the electricity system found in 2009 was not working to maintain security of supply.

    3. Whirinaki certainly “capped” wholesale prices at a time of shortage – this is a bad thing, not a good thing. The way Whirinaki capped the price was by consumers paying for the plant to operate and maintain the price at a level below what it would be if prices had been allowed to rise commensurate with the shortage of water. Consumers paid for that through the Electricity Commission levy. In the 2008 winter, Whirinaki capped the price so that Meridian (which was exposed on the spot market through a lack of hedging and poor planning) would not have to face very very high spot prices. We all paid for that.

    4. Whirinaki did not “cap” retail prices, so that claim that ‘it stops power prices rising to unaffordable levels” is just total baloney. Retail power prices do not massively rise in times of shortage.

    5. There is no way Whirinaki would be run on diesel by wheoever eventually owns it. Diesel is incredibly expensive – that’s why Whirinaki only started running when wholesale prices went through the roof, because the costs could be recovered. It is likely Whirinaki will be run by someone in a reserve capacity role, possibly on gas, possibly on diesel, and fired up when spot prices hit a certain level. In other words, it will play the role it has done for the last few years – it will just be done economically and sensibly and by a market participant, not by the regulator).

    [lprent: I seem to remember popping you into the auto-spam some time back for failing to observe a ban for one of your aliases (umm yes..). However this is well-written so I’m letting it through for discussion. ]

    • Colonial Viper 5.1

      2. Whirinaki was indeed a “stand-by” generator, but it was a pretty poor one and one that an expert review of the electricity system found in 2009 was not working to maintain security of supply.

      Can you provide a more comprehensive quote from the report on this issue thanks.

      So Whirinaki is much more expensive to run. However its existence helps prevent widespread economic damage in the event of a brief demand shock. Whats more expensive, that or 250,000L of diesel?

      In other words, it will play the role it has done for the last few years – it will just be done economically and sensibly and by a market participant, not by the regulator).

      = it will play a role to maximise commercial private profits and a role which is sensible (to private shareholders, not necessarily to wider society)

      • factchecker 5.1.1

        Colonial – I can’t find the exact stuff but look up the 2009 Ministerial Review of the Electricity Market, I think it’s on the MED website.

        Why do you keep saying “private profit” when there’s every chance it will be bought by a SOE? And secondly, what is so wrong with “private profit”?

        The critical point is the way that Whirinaki was operated in the pre-2010 arrangements was suboptimal. Once the reserve energy scheme had been abolished the Crown has no need to own an idle piece of kit in the Hawke’s Bay. Better to sell it so an entity which will make better use of it.

        • Colonial Viper 5.1.1.1

          And secondly, what is so wrong with “private profit”?

          Easy, when it equates to public losses or increased socialised risks.

          Private players are welcome to make private profit in market areas other than core national infrastructure, subject to regulation designed to ensure a fair deal for the public.

    • Dear ‘factchecker’: we seem to agree on many points. (Does this mean that you also have no idea how the electricity industry works?)
      In response:
      1/ SOEs buy and sell things. They are set up as businesses to do so. They have a responsibility to maximise returns to the taxpayer within the constraints provided by the instructions of shareholding ministers. At the most basic level the retailers buy and sell electricity every day. We agree. A careful reading of the article will pick up an acknowledgement that the company is not being sold. Instead, it seems the value of the asset is being stripped from the company for private gain. As I’ve noted in comments above, if the intention is to transfer the asset to another SOE, avoid the bureaucratic process and associated costs please. If the intention is to privatise, well, ’nuff said.
      2/ I agree more could be done to improve security of supply (easier to manage when the government has an interest as it has to consider social costs and unintended consequences of market design). Selling Whirinaki drives in the opposite direction to improving security of supply.
      3/ I agree that it has been an effective cap on market pricing. But I disagree with your assertion that a cap on prices is a bad thing. Maybe it is a bad thing from the perspective of the market participants who are exercising market power. The opportunity for extreme price-gouging is removed. While Meridian may not have had the correct hedging strategies in hindsight, it needs also to be state that it would not have need to ‘plan’ so effectively if there was a properly functioning market. The degree of vertical integration amongst the ‘gentailers’ is a strong testimony to the fact that the market doesn’t work. A saying about the Emperor and clothes springs to mind.
      4/ “retail power prices do not rise massively in times of shortage”. Interesting, I wonder why this is so – maybe because there is an effective cap on wholesale prices. Whirinaki anyone?
      5/ Whirinaki may well be economic to run full time for a private user who has paid nothing for it, is not bearing the costs of transmission, and is transferring carbon costs to taxpayers (under any future National-influenced ETS). Privatise the gains. Socialise the costs.

      • factchecker 5.2.1

        David
        1. The bureaucracy and associated costs of selling a minor power plant aren’t huge, so I wouldn’t have thought that was a showstopper. One reason to sell through an open tender process is to flush out the company that wants it the most (ie pay the most). SOEs bidding for the asset are no different to any other company as they have their own balance sheets etc.

        You cannot back up the claim that it is being “stripped from a company” (what company? The Crown owns it and it is managed by Contact under contract) for “private profit”. If its bought by a SOE then it will be “public profit” (eventually).

        2. Selling Whirinaki improves security of supply. I’ve already outlined how it was run uneconomically in the past. Some additional reasons why the reserve energy scheme and Whirinaki hindered supply security:

        a) it reduces the incentive for other companies to invest in peaker plants
        b) it reduces the incentive for companies to manage their own risk (discussed previously)
        c) encourages political lobbying to change the rules regarding when it starts up, the price point at which it is used etc (reducing certainty – this happened in 2008).

        3. A cap on prices is bad because it leads to less effective price signals being sent through the market. The electricity market relies on price signals to indicate when new investment is required (in the long-term), when demand-side responses are required, when peaker plants should start-up, etc.

        The electricity market was and is by no means perfect. A range of govermment decisions in 2009 will probably improve it though – only one of which is the ending of Whirinaki’s role in the market (by the goverment). I would say though that vertical integration does not mean the market does not work, and a range of expert reports since 2000 backs me up on that.

        4. No, it’s nothing to do with Whirinaki. Between 2000 and 2003 the Crown didn’t own Whirinaki and there wasn’t a “reserve energy scheme” under which it operated. During that time retail prices didn’t skyrocket in times of shortage either. The reason why wholesale prices are disconnected from retail prices during a shortage is that retail prices are “smoothed” throughout the year by the companies. For example at times of low wholesale prices (typically when the lakes are full and supply is plentiful), retail prices far exceed wholesale prices. At times of shortage the reverse is true. Companies have sophisticated ways of smoothing prices out, and also have a range of hedging arrangements as well. The new liquid hedge market will help companies plan better for the future as well.

        5. Your sentence contains a range of incoorect assumptions. First, whoever buys Whirinaki will pay something for it. Second, why wouldn’t they bear the cost of transmission? Any electricity company that buys it will bear the cost of transmission because Transpower recovers costs from electricity companies for it. If it’s bought by a non-electricity company and used in a localised capacity, then there isn’t any transmission cost (or whatever there is is borne by the company). Third, costs of carbon under any ETS (National or Labour) are borne by taxpayers in the short-term as the number of credits reduces slowly over time. You can’t expect to load immediate costs onto a business without any compensation in the short-term.

        Just by the by, I am somewhat flummoxed by all this talk of psuedonyms and bans etc. I don’t have any pseudonyms (that I know of), and I had no idea I was banned.

        • Swampy 5.2.1.1

          4. Between 2001 and 2004 there was no generation plant at Whirinaki. It is a rebuild of a previous power station that closed in 2001.

          • David Clark 5.2.1.1.1

            @ factchecker,
            I’ll respond to your points in turn:

            1/ Government owned companies bidding against each other to buy a government owned asset in a tender process run by a government department is ludicrous. It is an abhorrent waste of taxpayer’s money. Shareholding Ministers should just get a grip and make some straightforward decisions in the interests of avoiding widespread economic damage in the event of a brief demand shock. Transfer Whirinaki to an SOE with some simple instructions for its use.

            2/ Rubbish. It has been run in the past in order to avoid unintended consequences of market failure. This is not uneconomic use.

            a/ true, but the incentives are not strong in this respect anyway. The market is not perfect enough for generators to gain sufficient return on investment in sufficient infrequently used peaker plants as would be necessary to have perfect security of supply. There are much greater returns to be made from ‘ordinary’ generation.

            b/ I don’t see a convincing argument on this.

            c/ agree this is not desirable, but if, as you claim, you know the industry well, you’ll know that lobbying is one thing that is never in short supply in the sector.

            3/ a cap on prices has significant social benefits in that pensioners and other poor folk don’t freeze to death. As long as the cap is sufficiently high, it has little effect on the price signal in the market. There are sufficient economic renewables that could be developed for generation using current technologies to keep the market supplied for decades to come.

            You say vertical integration is not evidence that the market doesn’t work. The “range of reports” you refer to were written by those with a stake in keeping up appearances. The Emperor’s loyal subjects have much to gain by keeping the Emperor happy. The most rigorous independent investigation into these issues is found in the Wolak report (ComCom commissioned I think). By design, Whirinaki has been seldom used. You, like other detractors claim it discourages investment in the New Zealand ‘market’. If this is true, the effect is insignificant. The 2009 Wolak report found evidence of “market power”. Market abuses mean that there is no shortage of returns to investment in the NZ energy industry.

            In fact, market design and structure resulted in excess wholesale (spot market) prices across the industry to a total of $4.3 billion over six-and-a-half-years. See:
            http://www.comcom.govt.nz/media-releases/detail/2009/commercecommissionfindsthatelectri

            4/ I am sure the sophisticated ‘smoothing’ models for retail pricing take Whirinaki into account. I sincerely hope the new liquid hedge market will improve the viability of the market as ‘market’. The jury is out on that. What we do know is that it sure as hell hasn’t worked historically.

            5/ You misunderstand me. To take your points in turn: First – whether $1 or $100 is paid for it, the potential social and economic costs of demand shocks make it a foolish sale if it goes into private hands. Second, I am discussing the case of ‘sell off’ of the asset; grid transmission costs will be removed if it is used to supply a private enterprise – this seems to be where you get to in the end. Third, you again sound like an industry lobbyist. Why should taxpayers subsidise the market for the costs of polluting activities? You can’t argue for a more purist market on the one hand and then demand subsidies on the other (they distort market signals for goodness sake!) 🙂

            • factchecker 5.2.1.1.1.1

              David, I’ll just pick up on a few points because it’s clear we disagree quite fundamentally.

              1. I don’t see why its a waste of money for a tender process to be used to make sure Whirinaki goes where it is valued the most (ie the company that pays the most). That seems eminently sensible to me.

              2. The market already incentivises peaker plants already, through the spot market, and companies also have an incentive to build them to balance their own intermittent generation sources such as wind (which is increasing). That’s why Contact is building gas peakers at Stratford, why Todd Energy announced yesterday it will be building one, etc. The existence of Whirinaki dulled those incentives because the goverment was bearing the risk for companies.

              In terms of (b), the point is that companies knew that when Whirinaki would enter the market at a certain price point and cap the price, there is less incentive to manage the risk of being exposed to high spot prices. Case in point, Meridian in 2008 which was exposed on the spot market (ie it had to buy very expensive generation to service its customer base). Entry of Whirinaki capped the spot price, saving Meridian lots of money but costing the taxpayer instead. The abolition of Whirinaki has meant that high spot prices will always be the result of shortages and comapnies need to plan for that eventuality.

              You continue to repeat the claim that a cap on prices stops pensioners freezing to death. I’ve already discussed why Whirinaki has nothing to do with retail prices.

              Without going into huge detail about Wolak, there are numerous other experts who disagree with him (I think the 2009 Ministerial Review was pretty critical as well).

              Yeah models of pricing probably did take Whirinaki into account, little impact though that was.

              Just finally on the ETS point, both National and Labour ETS schemes provide compensation for businesses that didn’t previously face a cost of carbon. The reason for this is that government is imposing a cost burden on business through setting up a carbon market. It makes sense to phase that in slowly over time, reducing support for business as times goes on and business adapts to the new environment. If you just unilaterally imposed a carbon price on business then you’d see massive social consequences as businesses collapse, people put out of work, etc.

              That’s why every ETS proposed or in place around the world compensates in the short-term for the cost of carbon.

              • Factchecker, we’re going to have to agree to disagree on some of the fundamentals.

                I’m not convinced that a market in NZ is the best solution. For starters, we’re just too small. Historically, there have been plenty of successful (USA, and now increasingly China) companies with over a million employees. These companies don’t need an internal purist neo-liberal market to compete efficiently and successfully on the world stage. It’s time we took a stronger “NZinc” perspective and focused on competing in the wider world. Internal wrangles are a distraction. It turns out that the far-right mantra of the unregulated marketplace is not only theoretically undesirable – but also *not* the revealed preference of rising economic powerhouses.

                I’m reminded of the Tom Scott cartoon around the time ECNZ was divided up; two Treasury officials are depicted engaging in ponderous discussion: one declares “I know it works in practice, but it doesn’t work in theory!”

                The Wolak report is the most critical and thorough review of the market done in recent years and it points to the players in the market running the show. The reports that are critical of it are all written by people with skin in the game.

                If the Government is beholden to a purist market ideology at all costs, then that’s what we’ll get – all costs. In my view the market can be a good servant if properly regulated – but it makes an appalling master.

                Your mini-lecture on emissions trading systems and their impact on business – and social consequences – is not necessary. I worked on both of these issues when employed previously at the Treasury and in the Climate Change Minister’s office. The point is that while Labour’s scheme was modest, National prefers yet higher subsidies to business. Go figure.

                By tampering with the existing system, National indicated possibility for further lobbying and pork-barrelling. Most business leaders will tell you this is a distraction from what they want to do. My experience is that business prefers certainty, so that it can plan effectively for the future. Certainly a transition is necessary when an ETS is introduced – but business leaders indicated at the time the original ETS entered the House that they could live with the path that was in place.

                Signing off now. Thanks for the debate.

      • Swampy 5.2.2

        No, when an SOE Sells an asset it is not customarily referred to as privatisation. SOEs and government departments sell stuff all the time, and no one sensible calls it privatisation.

        • David Clark 5.2.2.1

          Hi Swampy, this point has been addressed a number of times in the thread above (e.g. at 5.2).
          I don’t think anyone is taking issue with the freedom of SOEs to buy and sell things within their mandates. It is just stupid in the current situation, that’s all. If it were illegal, other remedies would be available.

    • Swampy 5.3

      @factchecker
      1. If that was a privatisation, Labour didn’t think twice when the handsome dividend of about $800 million came their way.

  6. PS – thanks lprent for letting factchecker’s five point thesis through. While the ad hominem opening sentence might be poor form, it is an important debate and factchecker makes some useful points that demand a response.

    • lprent 6.1

      Yeah that is what I thought as well. If he keeps up this level of debate I might have to un-ban his various pseudonyms just to see if it keeps up. Rather than manually releasing and wasting my time (but it is always a trade off about time wasted if he drops back to the form that got him banned in the first place).

      • factchecker 6.1.1

        I’ve just had a search of other “Factcheckers” on this site. Certainly not me. Weird.

        [lprent: I see what you mean. The person who got banned was using a fact checker@ identity as well from the same IP that he got banned from as comedy. So I banned him permanently for the stupidity.

        But I see your IP on the more rational (albeit wrongheaded IMHO) comments. That clearly deliberate identity nicking gets comedy permanently on my shit list. But factchecker@ is now out of auto-spam. Feel free to argue.

        Probably pay to have a look around other sites to see if he has been using it elsewhere as well. When I get near a computer again I will fix the handle of the other factchecker. It is a bit tricky on the pad. ]

  7. clean energy 7

    What has Gerry Brownlee done in his Energy portfolio outside of wanting to mine national parks… he got himself a nickname, removed the ban from dirty energy and… doesn’t seem to have achieved much when it comes to actual Energy..

    First ACC is looked into, then Whirinaki is for sale… Nats can’t wait till next term for the privatisation to begin…

    P.S. very good post David.

  8. Swampy 8

    I think you are quite mistaken about Whirinaki. It is the most expensive power station to operate in the country.

  9. Swampy 9

    That they are selling it means further power generation is unlikely. Whirinaki was a previous station in a similar configuration to now, yet it was shut down. Because it is very uneconomic to have such an expensive station sitting there never fired up because it’s too expensive.

    After all where is this station? In Auckland where the most demand is? No, it’s out of the way in Hawkes Bay. How much does it cost to get its power to anywhere useful in the event it is fired up?

    • Marty G 9.1

      the problem is you’re saying “very uneconomic to have such an expensive station sitting there never fired up”. The point of the plant is not to be economic (you actually mean commercially viable), it is to prevent power shortages. A market doesn’t have to, and won’t, supply product to meet demand at every moment – yet we want our electricity system to do precisely that because of the whole-of-economy costs if you can’t rely on the power supply.

    • Colonial Viper 9.2

      After all where is this station? In Auckland where the most demand is? No, it’s out of the way in Hawkes Bay. How much does it cost to get its power to anywhere useful in the event it is fired up?

      🙄 There is next to no power generation in the Auckland Supercity area.

      Because it is very uneconomic to have such an expensive station sitting there never fired up because it’s too expensive.

      Until a demand shock occurs and then its a choice between the economic cost of 250,000L of diesel and the economic cost of rolling blackouts.

  10. Swampy 10

    http://www.business.govt.nz/companies/app/ui/pages/companies/812020?backurl=/companies/app/ui/pages/companies/search%3Fmode%3Dstandard%26type%3Dentities%26q%3Dterralink

    Terralink Ltd was put into receivership in January 2001. It was liquidated the following June.

    Who was the owner at the time? The Minister of Finance i.e. Terralink was a government SOE.

    Which government was in power at the time and what promises did they make to the electorate concerning the sale of SOEs?

    What happened to Terralink? A new private company was formed in May 2001 to buy the assets of the SOE from the Labour Government. And what is really different about that from what National is doing today? Nothing much at all.

    And why would any SOE not be able to sell its own assets from time to time because the fact is that they all do that quite normally in the course of business anyway.

  11. George D 11

    The last Labour Government privatised a bunch of small assets. They just don\’t tell you about it. We need a real left wing opposition, not the softer face of neoliberalism that we\’ve had for the last 15 years.

The server will be getting hardware changes this evening starting at 10pm NZDT.
The site will be off line for some hours.