Stop the gentailers bribing investors with borrowed capital.

Written By: - Date published: 9:15 am, December 10th, 2022 - 47 comments
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Brian Easton at Pundit provides a clear overview on what is happening in our large generator / retailer market at present and the way that their implicit collusion on excessive pricing looked at in economics. They’re profiteering and even using future capital to pay off investors rather than improve the cost of and efficiency usage of power.

Brian Easton’s question “Should We Nationalise The Electricity Industry?” is extremely relevant based on the decades of rapidly escalating power prices since the failure of our electricity de-nationalisation in the 1990s.

In particular I liked these paragraphs explaining strange expectations about the benefits of competition.

We are trapped into the thinking we were taught in Econ101 about pure competition. Sometimes we need to think more radically. Here I focus on the number of significant firms in the market. The trick about pure competition is that the individual firms do not have to think a lot about other individual firms; rather they focus on the market generally and their customers particularly.

As the number of market players reduces, businesses start looking at one another and responding according to how they think their competitors will behave. You might think that this will be beneficial to their customers, but what this sort of behaviour can lead to is that the incumbents connive to raise prices. No, not meeting in smoke-filled rooms, but by working out how their competitors behave the market can, in effect, behave almost monopolistically. There are number of experimental studies involving players separated in different rooms who nevertheless work out how to attain cooperative outcomes without direct communication.

I was once taught that where there were more than five significant firms in an industry that the gaming became too complicated and the industry began to behave like the competitive businesses that workable competition was based upon. However, the ‘five’ was a rule of thumb; in particular circumstances it might be six; it might be four.

As it happens, New Zealand is riddled with markets where there are only a few significant players: one (domestic) airline, one port per region, two supermarket chains, three petrol chains, four banks, four electricity gentailers (generator-retailers). There are, of course, smaller firms in each market but each is dominated by a handful of players.

Brian Easton: “Should We Nationalise The Electricity Industry?

The comment about Econ101 just about exemplifies the purported naive economic viewpoint of Act supporters and some of the National support I run across. They clearly haven’t ever bothered to look at how companies and even individuals operate in reality. I once spent a decade working on code and economic algorithms for commercial management simulation software for teaching business students (I referred to it as my ‘MBA torment revenge’ ).

That was designed to elicit a realistic economic behaviour of students working in teams running one of a number of companies in a market place. There were many markets (worlds) covering some very large classes. More often than not there was a lot of implied price making between teams – most often after a few companies had driven out their weaker competitors. It was certainly more frequent than the worlds where effort was made on R&D or production process savings or even expensive marketing. It was easier and less expensive to implicitly collude between near-equals than to actually drive price efficiencies.

This is also what is evident in just about every economic study that has ever been done.

In NZ, this is very evident amongst our gentailers.

There is a recent report by the NZCTU which draws attention to the fact that from 2014 to 2021, the four big gentailers distributed $8.7b in dividends but earned only $5.4b in profits. Firms that do this usually go bankrupt, but not in this case. It is a bit complicated to explain but, briefly, a monopoly is able to borrow secured against its future profits and pay the borrowings as dividends. That is what the gentailers have been doing.

Brian Easton: “Should We Nationalise The Electricity Industry?

In effect, this is a bribe specifically aimed at securing their political base against regulation or the opening up of their market. The recipients of such borrowed largess are the relatively affluent who hold shares. In other words mostly Act and National supporters who have capital, often explicitly or implicitly inherited.

Rather than using their ability to raise capital to improve the delivery and production of power, they are using it to pay off the affluent so that they can continue to bilk those consumers who don’t receive benefits from dividends.

This is most clearly seen when you look at the commissioning dates of power plants in NZ over the last decades. Wikipedia has a comprehensive list complete with an ability to order on commissioning dates. In the last decade there have been 4 geothermal, 1 hydro, 2 fossil, 4 wind, and 2 solar plants built. The capacity of these additions to our societies power generation is dwarfed by the decommissioning of fossil plants Otahuhu B, Southdown, and the slow drop in power from Huntly in the same decade.

During that same decade our population grew from 4.4 million to 5.1 million. Something doesn’t add up. Rather than spending capital to ensure the capacity to handle a growing population and industry, the gentailers have been using it to bribe investors.

Now there have been major improvements in the efficiency of use of power. But this doesn’t come from gentailers or retailers of power.

For instance in our two near identical apartments in the last decade we have changed all of our power hungry appliances for much more efficient ones. The only things that we haven’t replaced have been the oven (which we don’t use) and the stove top. As you can imagine in the days of increasingly working from home, the number of screen and computing devices has been proliferated. We have 3 workstation level desktops, more and bigger screens for them.

Our actual use in kwH in our apartment has been dropping for the last two decades as our power bills rise. The improvements in overall power usage in the last decade have been in the order to 10-15% despite far more productive work coming from our home/office. The price rises in the total bill have been been close to 10-15% in real terms. In effect, our apartment has seen a 20-30% increase in power prices over the last decade despite our apartment having considerable capital expenditure and process changes for a more efficient usage of power.

This is common everywhere in the country. Figure NZ has a great set of domestic power price graphs (unfortunately not Auckland) that exhibit this. Like this chart for Whangārei which has been experiencing similar but higher power increases (“Northlanders struggle to pay power bills that are 40pc higher than Auckland“). It demonstrates the same slight rise in line charges and a massive increase in energy and retail components – most of which come from the dominant gentailers.

The efficiency increases hasn’t coming from the gentailers. It is impossible to see anything more than lip-service to power efficiency from them at the consumer level. No real assistance towards energy efficiency – just a whole lot of marketing trying to poach customers from other power retailers. The domestic and business efficiency levels are driven almost entirely by overseas technology and by the consumers of electricity.

About the only efficiency improvements that are perceivable in the electricity generation and transmission sectors appear to come our monopoly transmission supplier Transpower. Their pricing effect in mostly in the line costs, the part of the bill that hasn’t been increasing at breakneck speed. Transpower have a active set of capacity, refurbishment, and update projects underway or being planned.

When I look at the electricity sectors, the only things that I can see from gentailers that indicates that our ‘competitive’ gentailer market is that it is efficient in bribing investors with dividends in a large part paid for by borrowed capital. It certainly hasn’t been efficient at keeping power prices down or providing sufficient capacity and efficiency gains to allow those prices to come down.

That is unacceptable.

47 comments on “Stop the gentailers bribing investors with borrowed capital. ”

  1. Tiger Mountain 1

    Rare is the day that I applaud an LPRENT posted contribution unreservedly, but this is one of those days.

    Masterclass in describing how this significant historically taxpayer funded and built public infrastructure operates largely under the control of private capital.

    Nice to see Brian Easton still with us and into the fray.

  2. Max Bradford, an infamous meddler, of "Line charges' fame. A Nat!!

    From there we gained hollowed out assets for shareholder profit, while we were told “you will get cheaper power” and “infrastructure will be taken care of” Tui Tui Tui!!

    Excellent post.

    Those who qualify should join Grey Power ($30 annually,) which provides good group access to Pulse Energy at great rates.

  3. RedLogix 3

    So what type of generation should have been invested in? Because from where I am sitting there are substantial uncertainties no matter what they do:

    Geo-thermal clearly has capacity constraints, permitting issues, and uncertainty over who might own the resource.

    Solar wind battery capacity might be cheap to build, but the costs of integrating it into the system does not mean cheap electricity to the consumer. And again permitting issues.

    Hydropower opportunities are all pretty much tapped out

    New fossil fuel thermal capacity is a non-starter given the obvious risk it will be stranded to meet climate targets.

    And no-one in the industry would dare so much as darkly mumble the n-word in public.

    So well and good to criticise the gentailers for failing to invest; not so many marks for telling us what they should have invested in.

    • lprent 3.1

      Apart from the continual growth of geothermal baseload? Currently about 15%?

      That isn't very constrained geographically. There really aren't that many places in NZ that we can't put geothermal plants in at varying levels of efficiency. You can usually find warm or hot springs within about 50km of most places in NZ. Virtually all of those locations can be used for some form of power with modern techniques. It indicates a hot mass not too far down.

      The current concentration in the volcanic plateau is just that there is a high ROI in there measured despite the additional costs of the more caustic water there.

      The other obvious one for NZ is offshore wind. Personally I can't see any particular reason to put it on land. Our best land locations are up hills that are bloody awkward to service. We don't have a nice reliable Continental wind pattern that allows wind power to be built on flat land.

      We have quite a lot of shallow water over an enormously long coastline. We virtually always have winds suitable for power generation across most of our coastline. It is also a suitable industry for us to get into because there is a complete dearth of expertise in our region of the world. It'd be a good industry to transition Taranaki to.

      Encouraging household and business solar is completely against the gentailers interests, but is completely possible in NZ. My parents made a modest investment in Rotorua ~15 years ago and had a immediate major drop (>75%) in their draw on the grid. It was paid off in about 11 years. If they'd had lithium battery and the cheaper more efficient panels banks now available, it'd have cost a bit more, but been paid off a lot faster.

      Leave the water in the dams and use it as baseload and for the times when the variable systems tap out.

      You'll note that the options that I have pointed to are directly against the gentailers interest but are in the countries interests. They may be generators – but they certainly aren't in the business of creating new power.

      They mostly use the old power systems or systems /locations that they have done before. Their use of capital to pay for dividends rather than generation means that they cannot do anything apart from that – it risks the returns to their current investors.

      Offshore wind power would require a whole new industry to be started up, and to be supported by Transpower. It can't be done without government level investment in getting it off the ground.

      To do geothermal generation using lower energy sources would require the kinds of startup investment that went in 40-50 years ago into the volcanic plateau. That paid off with ~15% and increasing part of our baseload.

      To make housing and most businesses close to self-sufficient in solar is a strategic project. But it is quite feasible and desirable in a country that is as unstable as this one. Sure it will probably need grid support and a smarter distribution system. But it also makes for a much more dispersed and resilient system for when we have earthquakes, volcanoes, and just simple periods of floods, droughts and storms.

      But the power system in NZ isn't there to make power companies and their investors wealthy. It is there to make other businesses and workers more productive.

      BTW: My objections about nuclear in NZ are purely based on waste disposal. We have had 70 years of proving that there are no effective proven solutions so far for that for medium to high level waste or even to something as simple as disposing of obsolete plants.

      Come back when you can show a scaled-up nuclear plant with a safe disposal system for its complete life cycle in a continental environment. Finland appears to be the only experiment running – and that only just opened. Nuclear engineers have so far managed to only prove that they don't understand the concept of a completed tidy life cycle for the plants that they have built.

      And that is before I even start looking at trying to do nuclear waste disposal in this rocky country.

      • arkie 3.1.1

        Part of the Greens 2020 energy policy was for solar grants and the building of a 'Virtual Power Plant':

        Solar State Homes

        Throughout Aotearoa there are 63,000 state homes. Those rooftops are an untapped opportunity to create free electricity from the sun and reduce power bills for families. The Green Party will put solar panels on every suitable state house, along with a battery pack to store the power for when it’s needed, and a connection to the local lines network to share power with neighbours. New state homes would also be built with solar panels and batteries, whenever feasible. The rooftops of our public houses will become a huge Virtual Power Plant.

        We estimate this will save households approximately $1,000 a year on their power bills.

        • Tony Veitch 3.1.1.1

          Once again, the Greens have got it right!

          • bwaghorn 3.1.1.1.1

            Don't see the point in putting batteries into grid connected houses, ? Other than that I like the ides of solar panels on roofs,

            • arkie 3.1.1.1.1.1

              From the policy document:

              Solar can take demand off the big power stations when the sun is shining, leaving the hydro lakes fuller to cover demand when it’s needed, like on cold, cloudy evenings. With batteries, storing electricity while the sun is shining, we can reduce the peak evening demand on the rest of the electricity network – because when people get home to cook dinner they’ll use the energy stored in their batteries.

            • pat 3.1.1.1.1.2

              Depends on generation capacity….if you regularly produce more than you consume then it is income generating….with or without batteries. Batteries provide security of supply.

            • lprent 3.1.1.1.1.3

              Direct solar power doesn't supply power during through the night. It provides too little power when there is low cloud with rain.

              Having a substantial battery pack means that you probably won't have to take power from the grid. You also be seldom contributing to dividends of others, and you will have a largely independent power supply.

              In my case it means that I can replace my UPS units for the servers with a solar powered battery. Servers run all of the time.

        • RedLogix 3.1.1.2

          Take a look at the costs:

          The most effective system size is 10kWhr costing around $12k for the battery alone. Add in the solar panels, the electrical equipment and installation – you are looking at not much change out of NZ$25k. (This aligns closely with numbers from a work colleague who has exactly just such a system.)

          If we managed to install around 80% of the 1.8m dwellings in NZ at a cost of say $20k each – this totals around $30b. Add in another large fraction of this to completely re-configure the grid to cope and we are looking at more than pocket change.

          Given NZ's electricity system is already highly de-carbonised due to our high fraction of hydro power – you have to ask whether or not there are not better ways to spend the capital. Again it is not an undesirable idea, but as with all things engineering there is more to it than a political slogan.

          • lprent 3.1.1.2.1

            Given NZ's electricity system is already highly de-carbonised due to our high fraction of hydro power – you have to ask whether or not there are not better ways to spend the capital. Again it is not an undesirable idea, but as with all things engineering there is more to it than a political slogan.

            Personally I wouldn't do it to de-carbonise, as you say our generation is almost entirely carbon free and is likely to be fossil free within a few years. And you have to ask what people are thinking about when they say things like that without considering lifetime costs.

            At that point we are really just left with the greenhouse gas emissions from geothermal (excessive leaking CO2 and other gases from the geothermal water), possible unsustainable bio-generation (hink about it for a few minutes), and the manufacturing costs for the electricity system and its maintenance.

            The latter will be considerable as new generation is brought online. For instance think about show a hydro-dam is made. Or the types of manufacturing required for solar panels or batteries or wind turbine systems.

            Fortunately most of these climate costs are up front rather than running climate costs on relatively long life systems.

            If we managed to install around 80% of the 1.8m dwellings in NZ at a cost of say $20k each – this totals around $30b.

            But I'd build a solar system in a house because I'm tired of paying capital rent on a system that we already paid for. It becomes worth while to pay the price of a partial renovation to get rid of the on-going bill from the gentailers.

            We pay about $2500 for power annually and it is increasing exponentially. Based on your numbers I'd have a payback well within a decade. The solar system and maybe the batteries would probably outlast me.

            The life of lithium ion or polymer batteries is getting pretty long compared with that they were new a decade or so ago. I have been continually surprised about lithium battery life.

            • RedLogix 3.1.1.2.1.1

              We pay about $2500 for power annually and it is increasing exponentially.

              Yes. I pay the electricity bill for a family household in NZ, so that number does not surprise me much. And when you buy a home, at our age you will likely live in it more than a decade, so the payback will be there. (But keep in mind you will likely not want to disconnect from the grid altogether so there will be a residual line charge in the mix as well.)

              The challenge for most people is that either they rent, or that a decade or more to get to payback is too risky. Chances are they will likely move house before then and never get to positive cash flow.

              Again I am not against this technology – but if we want it to be adopted at a meaningful scale – just leaving it up to the household to invest will likely not get us there. Ideally a govt funding scheme to spread the risk.

              • lprent

                …there will be a residual line charge in the mix as well..

                Sure – but the growth in line charges is less than the mean inflation rate.

                Chances are they will likely move house before then and never get to positive cash flow.

                Agreed. But the annual power cost at present is also about a tenth of the cost of or soon to disappear mortgage. It is larger than our transport operating costs, including capital costs. It is 50% higher than our combined data, voice, and cell costs.

                Every other cost in my life in real terms has been effectively dropping over the last two decades. Either the price drops in real terms or what benefit you get out of it increases.

                Power? It is a complete innovation dead zone. It is where you keep paying new capital prices for hundred year old capital assets.

                But the rort of power profits keeps increasing as the security of supply keeps decreasing.

                How many people have bee unable to move out of renting because power is now their third largest cost after rent/mortgage and food.

                …just leaving it up to the household to invest will likely not get us there. Ideally a govt funding scheme to spread the risk.

                You don't take the power systems when you leave a house, it just becomes part of the sale price of it, and increases the attractiveness of the purchase.

                Think of it like adding a extra room, a garage, or carport.

                Having the government to help would be nice. But frankly I'd prefer if they put the effort into making the grid able to accommodate non-baseload generation. At present it absolutely sucks at that basic task.

          • Ad 3.1.1.2.2

            As per below there are already multiple investors on ground with consented projects in NZ large scale solar. Large scale for NZ anyway.

            Beyond the NZ projects, the investment to watch is the NZSuper+Infratil investment into Longroad Solar. The market is viewing this investment very favourably indeed.

            Infratil announces new capital and co-investor for Longroad – Infratil

      • RedLogix 3.1.2

        None of the opportunities you list are quite as low risk as you portray them.

        All the solar and wind approaches inherently face both low utilisation and intermittency. These aspects mean that while an installed MWyr of nameplate generation capacity might be cheap enough; integration into a reliable grid is not.

        Household solar and battery is a lot more accessible, but you can hardly blame gentailers for not investing in something they do not own. You also need to take into account that the average household moves about every five years, which means actually accessing a decent return on the investment is not so obvious. Good idea – needs more govt leadership to create the correct incentives for households.

        And geothermal efficiency and ROI falls off a cliff as the source temperature drops. Yes there is plenty of hot water energy down there, not so much that is accessible or economically viable.

        As for nuclear – I was being half facetious. I have consistently said there is no obvious driver for NZ to be an leader in this space – there is plenty of innovation happening overseas that I believe by the end of this decade or so, will deliver on the objections. But even then – the overwhelming investment hurdle will be a population indoctrinated into an irrational fear of the technology.

        Note carefully – I did not claim any of these new generation opportunities are impossible. But from an investment perspective there is too much uncertainty, and this is what stops the private sector. I think we both agree this means it is up to the public sector – with it's much larger capacity for intergenerational (pun intended) risk – to step up and do the innovation.

      • Ad 3.1.3

        Yes there are three big offshore wind proposals on the table at the moment.

        I suspect the investors including NZSUperFund are pushing the government to legislate for offshore Renewable Energy Zones, in close concert with Transpower who have formed the concept.

        Renewable Energy Zones | Transpower

        Minister Wood has already directed MBIE staff to go to Australia to carefully study the Australian offshore wind regulatory regime so we can get ready for it.

        Offshore wind developments – what will the NZ framework look like? – Bell Gully

        Putting the concept into legisation in the second part of the RMA reforms would make it much stronger than the Renewable Energy National Policy Statement.

        National policy statement for renewable electricity generation | Ministry for the Environment

        These three offshore proposals are of a scale that would truly turn Huntly Thermal into peaking plants only.

        If any young person wants to know what kind of engineering degree would make them a mint, get into offshore wind energy engineering qualifications. It's going to be bigger than oil was in Taranaki.

        • RedLogix 3.1.3.1

          Yes. Aus and NZ are fortunate in that both the wind blows and the sun shines reliably enough to make SWB renewables worth doing at scale. South Taranaki is the obvious place to locate offshore wind platforms.

          But installations capable of withstanding exposure to the extremes of the Tasman Sea will neither be cheap to build nor maintain I suspect. There are substantial structural challenges around corrosion, storm stresses, fatigue, and biofouling to manage. The ocean is a terrible environment for complex electrical equipment and even relatively simple components such as sub-sea cables can throw unhappy surprises. A quick search on this topic confirms this.

          And everything that has to be done at sea costs 3 – 5 times the equivalent task on land. And the more exposed the location the worse this gets. By all means I applaud anyone brave enough to invest in offshore wind – but they may well need deeper pockets than anticipated.

          And perhaps the aspect that gives me most pause is that every place where there has been mass commitment to SWB renewables so far – has seen consumer electricity prices rise dramatically. And this in an industry that is far from immature. Surely this puts some onus on the proponents of this technology to explain in detail how they plan to turn this around in future.

          • Ad 3.1.3.1.1

            I'm quite happy to let the investors make that evaluation. All three current proposals have monitors in sea already for all sorts of evaluation, that will go into the Consents.

            It's likely they will be using many of the existing conduits that gas and oil companies have put in for their rigs.

            I can see NZ's entire continental shelf being auctioned off in blocs – since they all have different seasonal and multi-year wind load averages – in a manner pretty similar to the oil exploration blocs of old.

            I think the big investment test will be on the Electricity Authority to better evaluate the grid upgrade investment plans of Transpower to enable a stronger grid across the centre of the North Island – at the moment their AMP criteria are way too restrictive to cater to the surges of wind and solar renewables.

            But again, the pressure from the investors is already strong and building, and that's what Transpower need. The big onshore wind like Turitea has been a useful rehearsal for Transpower central North Island upgrades and so far they are on track.

            • RedLogix 3.1.3.1.1.1

              I still maintain that the track record of SWB around electricity prices is not all that flash so far. All well and good for investors to commit NZ to offshore wind at scale, but given that anything ocean based is inherently more expensive than land based (despite the more favourable capacity factor), a responsible govt should be asking some hard questions on behalf of consumers.

              • pat

                "….but given that anything ocean based is inherently more expensive than land based (despite the more favourable capacity factor), a responsible govt should be asking some hard questions on behalf of consumers."

                A responsible (and capable) Government would.

                • lprent

                  A responsible government world ensure that there was security of power supply and that the price of power would not constrain the productive parts of the economy.

                  However as we know – National is neither responsible nor capable of doing either of those things. They put in a system that has resulted in fuck-all new power generation and that has succeeded in massively raising the real prices of electricity to both residential and business.

                  Nor are they capable of planning and producing housing for a burgeoning population, planning and providing safe water and sewerage systems, or basically responsible and capable of doing anything in government apart from sitting on the fat arses drawing a parliamentary salary and doing absolutely nothing (apart from having a referendum about a flag).

                  Perhaps you'd like to discuss that …

                  • pat

                    Criticism of the Government does not equate to support for any particular party.

                    I posed the question the other day as to the reason(s) for the apparent lack of capability amongst our politicians/public servants currently.

                    It matters both in terms of outcome for the country and will likely impact the approaching election…as I noted on one of your OP re the Victorian election.

                    Unlike the Australians we have a much easier road to reject all offerings and while it was a by- election yesterdays turnout indicates many may well do similar next year.

                    It is reasonable to expect a level of competence from those we remunerate to govern us….no matter their political affiliations.

                    • lprent

                      Criticism of the Government does not equate to support for any particular party.

                      The reality is that our system is still, and is likely to be remain to be for quite a while, essentially a two party system – modified a smallish bit by coalition arrangements with much smaller parties based on their parliamentary seats after the election.

                      With the slow dissolution of wannabe central parties between the two major parties over the last 25 odd years, this has become even stronger, not weaker.

                      So what I was asking about was equivalent criticism of the track record of the previous "responsible (and capable) Government". You may have figured out that government in my view was neither responsible nor capable as a government by at least an order of magnitude compared to the current one. This one tries to fix upcoming problems.

                      The last 3 terms of National-led government stuck its collective head up its arse and hoped that the problems would magically go away. They simply didn't even try to fix the problems like this one is doing – however inept we may consider it to be at doing that.

                      The problems with 3 waters for instance were raised early in the Clark government. The only things that National did were for exacerbate the problems with stupid stunts like their 'solution' for the Canterbury river systems (fire the people raising the issue). Same for climate change. National spent 19 years bemoaning the RMA including 9 in a National-led government. To date still haven't got any detailed changes they'd like to to do change or replace it. Labour at least has a proposed bill.

                      Competence in government is about adapting to and dealing with issues in our world and in in our place in it. National-led governments are just incompetent and irresponsible at doing that.

                    • pat

                      You fail to address the points made…never mind.

                      The first thing to understand is this (Labour) administration is not the Clark administration ….what went before is no predictor of what will follow.

                      It is entirely conceivable that action for actions sake will make things worse.

                • KJT

                  An assumption that is, when actual projects that are already in operation are considered, is not always true.

                  Many of the costs of land based projects have little to do with building and maintaining the plant.

                  Land costs including "opportunity costs", for example.

                  Ports of Auckland, to name just one example, is always measured against the killing National party cronies, private developers, would make if it was closed and sold for housing.

                  • pat

                    That is a perennial risk that we have (supposedly) developed systems to negate, or at least lessen….

                    An independent public service, the role of the opposition, transparency and the freedom to question any decision….and ultimately the ability to reject at the ballot box.

                    • KJT

                      "Ballot box"?

                      It only takes one lot of right Wing nut jobs to, even briefly, bullshit their way into power and yet another public utility is gone forever.

                      Like "no more asset sales" Key.

                      Despite the 80% of Kiwi’s that polled as opposing them.

                    • pat

                      Yes the poll did show a majority opposed asset sales and yet the electorate re-elected that administration…what does that say?

                      Any sold public assets can be re nationalised (either with or without compensation) by any parliamentary majority should it be deemed necessary/desirable.

                    • KJT

                      They were re-elected, After Key promised "no more asset sales", and he then proceeded to flog off some more, what does "that say"?

                      The fact that a Government that pretends to be democratic, proceeded with policies opposed by an overwhelming majority doesn’t say much for our “Democracy”.

                      Behind the retention of so many of the Neo-Liberal “reforms”, is the fact that the cost of reversing such monumental fuckups is horrendous. Buying back rail, after the burglars fucked it, was a prime example.

                      I expect we will eventually have to buy back power, after the dividend takers have irreparably fucked that!

                    • pat

                      Yes all that true but ask you what would you prefer….democratic elections with all the flaws or governance by those (potentially self appointed) deemed of the 'correct' class, religion or lineage?

                    • KJT

                      I would rather we have Participatory Democracy where so called "representatives" cannot ram through policies by "having a mandate" even when an overwhelming majority oppose them. And that we could choose policy, instead of just being constrained for voting for the "lot we didn't like last time".

                      Binding referenda and recalls if enough people ask for one, like Switzerland, would be a start. Demanding a better quality of policy making than the "on the hoof" idealogical reckons that we have now, especially from the right wing. Boot camps FFS!

              • Ad

                What you are pointing to has been well anticipated by Transpower's Chair Dr Turner who is the primary sponsor the NZ Battery Project in Otago. This project is intended to both build a capacity base better than thermal and also put brackets around the spot energy price. Locals are not in opposition which is astounding.

                How this project plays out against the NZSuper investment proposal for a similar base load off Taranaki is anyone's guess. A major risk is it certainly has a lot of parallels to the NZSuperFund actively undermining the Light Rail procurement process way back in 2015-7, which set back light rail a decade and probably forever.

                But I would trust Dr Turner's capability to shepherd his project through any change of government more than I would NZSuper. In fact the Cabinet decision on NZBattery is supposed to be next week as a preferred option.

                • RedLogix

                  Just keep in mind that the spot price is determined by the most expensive generator in any given 30min period.

                  • KJT

                    Which rewards corporate collusion currently exhibited, of deliberate under invest in supply.

                    Yet another reason to simply re-nationalise by building State owned supply and eventually putting the gentailers anti-social shenanigans, out of business.

              • lprent

                … but given that anything ocean based is inherently more expensive than land based (despite the more favourable capacity factor), a responsible govt should be asking some hard questions on behalf of consumers.

                But as you pointed out earlier in the discussion, there are no obvious places to put in hydro.

                As I implied earlier, stashing geothermal power in a single highly risky location subject to massive vulcanism is downright stupid. If they develop tech to do lower energy sources… But that hasn't been proven.

                Fossil power isn't coming back because it pollutes too badly.

                Nuclear fission has an inherently dangerous polluting waste problem that has proved to be unsolvable for 60-70 years.

                Shoving wind turbines up the top of hills is also just about as expensive as offshore – ask any engineer that has to look after them, has more planning and nimby issues.

                Taking over farm paddocks for solar isn't welcomed in farming communities.

                Offshore at least has the advantage of having had most of the issues previously worked on in the frigging North Sea by Norway and the UK. That is as hard as Cook Strait or shallow parts of the Tasman. It has a proven technology, a defined required support structure, and is a probable new export industry in our region.

                It also doesn't have nearly as much of a planning issue as onshore installations.

                So all new power generation is going to be expensive to install. Just like all sustainable power sources is (fossil fuels being off the table). The question about operating costs is appears to have been answered in the north with current contract prices.

                https://www.carbonbrief.org/analysis-record-low-price-for-uk-offshore-wind-is-four-times-cheaper-than-gas/

                All of the alternatives are expensive. Our population is growing by at 500k+ increments each decade. We simply can't carry on relying of hydro systems that were built for a population of 3 to 4 million when we're heading for 6 million.

  4. What could they have invested in?

    New Zealand Mate!!

    A solar panel rebate system as operates in Australia where suitable, instead of paying dividends to "Investors"

    The insulation and heat pump programme instead of expecting taxpayers to foot the bill. New power poles!! Plenty that would have helped people.

    Dividends could have supported health and education, instead profits were privatised and costs will be a bill for the public.

  5. Ad 5

    We have one of the most concentrated economies in the developed world both by oligopoly and by wealth concentration.

    And remain weakly and unevenly regulated.

    But each Labour term tends to have one or zero Ministers prepared to crack them.

    Who in our generation of activists will rise?

    • lprent 5.1

      Personally whenever I finally manage to buy a house*, my activism will be to invest to take it off the power grid with insulation, solar, and maybe even some wind.

      • It got stymied this year by the costs in getting bridging finance between buy and sell. Easier to buy a house, harder to sell our apartment. I was constrained by a requirement to stay in Auckland by my partner. Personally I currently work in Hamilton NZ, Austin Texas and a bit of silicon valley mostly from home, with a steadily reducing consumption of kwH and fossil fuels.
      • Ad 5.1.1

        We looked at it for our first build in Wanaka this year and passed.

        However in 2 years we will be pushing GO on the main build and will put in photovoltaic with battery to supply everything including the cars. Pretty confident the PV-investment-versus-retail-electricity bill equation will be right for us by then.

      • gsays 5.1.2

        As someone who went off grid 20 years agovI can only say ditch the wind.

        Moving parts need way more maintenance.

        If you do want moving parts then get a property that has a spring/summer safe stream and run a pelton wheel. Then there is no need for batteries.
        I have just helped a buddy upgrade his system.
        4kw of panels, a Fronius inverter to move power to the house during the day from the panels, then a Selectronic inverter to deliver from batteries to house when the sun is down. A 600 A/hour 48 Volt battery bank.
        $30,000.

        • lprent 5.1.2.1

          Sounds about right for the solar.

          The wind I'm thinking of are the newer vertical foil systems, mainly for overcast/night conditions. Umm in the style of what these guys are selling. I take the point about moving parts though.

  6. Sacha 6

    The wealthy renting daily essentials to the rest of us.

    Watch the unoriginal Nats do the same with water given half the chance. Hopeless at genuine enterprise.

    • Tony Veitch 6.1

      Quite right.

      We need to continually explode the myth/lie that the Natz are better managers of the economy than the left.

      And God help us if Act ever gets to pull the strings!

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