Energy Minister Gerry Brownlee’s ordered removal of a blog criticising his proposed power sector reforms is further evidence he is struggling in his portfolios, Labour’s associate energy spokesman Chris Hipkins said.
The blog by Powershop chief executive Ari Sargent (which was based on an earlier press statement, text below) warned the changes would increase prices and that the reshuffle of generation assets was flawed.
But after Mr Brownlee complained to the company’s parent, government-owned Meridian Energy, the blog was removed from the power retailer’s Website – see http://blog.powershop.co.nz/?p=204
Chris Hipkins said: “Mr Brownlee throwing his toys out of his cot to get his own way again demonstrates his extremely thin skin when it comes to any sort of criticism.
“He has overstepped the mark in what he is allowed to do as minister and bullied SOE officials to get what he wants. This is the just the latest episode in an emerging pattern with this government.
“The critique by the knowledgeable Mr Sargent is well thought out and raises real concerns that the Government is forcing through major reforms to the electricity sector without sufficient analysis.
“There is a very real danger that these reforms will both raise power prices for most New Zealanders and reduce the security of power supply.
“Instead of throwing his weight around to muzzle any criticisms, Mr Brownlee should listen to what people are telling him – that he hasn’t properly thought through the process and risks everyday Kiwis paying the price for his mistakes,” Chris Hipkins said.
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The censored Blog post is re-produced below:
Proposed energy sector reforms likely to increase electricity prices
There is a high risk the proposed reforms for the energy sector, released today by Minister Gerry Brownlee, will do exactly the opposite of what the Minister intends and actually raise electricity prices and reduce the security of power supply to New Zealanders.
New Zealand’s cheapest power retailer, Powershop, believes the reforms, due to be introduced into the House tomorrow through the Electricity Industry Bill, will potentially have a bigger impact than the Bradford reforms of the 1990s, the last major restructure of the energy sector.
Ari Sargent, CEO of Powershop, has grave concerns that the changes proposed in the Ministerial Review will in fact raise electricity prices for all New Zealanders.
“These are poorly thought out recommendations. The lack of competition in the market does need to be addressed, as it leads to Kiwis paying grossly inflated prices for their power. However, there will be unintended consequences associated with many of the proposed reforms, which could lead to prices increasing even further. Indeed the Government’s own Regulatory Impact Statement notes that “a more comprehensive review of the risks associated with proposed options” should have been included.
“The security of power supply is another major issue that needs tackling, but some of the suggested reforms could worsen rather than resolve the problem,” Mr Sargent says.
Measures to improve prices, costs and competition – Reconfiguring of SOE Assets
Suggested reform:
- Tekapo A and B power stations to be transferred from Meridian Energy to Genesis Energy and the government owned Whirinaki plant to be transferred to Meridian Energy
Tekapo is the first lake in the Waitaki River, which is the lifeblood of New Zealand’s electricity supply system. Because of its place in the river system, Tekapo can control the water available to generate electricity throughout the entire Waitaki system, which is made up of eight separate hydro lakes.
“It is illogical to reduce the co-ordination between the Waitaki catchments and completely reckless to provide commercial incentives to a single supplier who has the power to restrict water to the rest of the catchments. This puts the security of supply at risk and will see a change in river operation that will increase wholesale prices and prices to consumers, particularly in the South Island,” Mr Sargent says.
Measures to improve security of supply
Suggested reform:
- Require retailers to make payments to consumers in the event of a conservation campaign or dry year power cuts
“Powershop fully supports providing a reliable supply to consumers and compensating them during forced conservation, but retailers have no control over the security of supply. Therefore, it is utterly illogical for retailers to have to fund this. The onus needs to be with generators, to give them the incentive to protect security of supply,” Mr Sargent says, “Retailers have no ability to control energy supply and forcing these costs on retailers will create new barriers to entry.”
- Put a floor on spot prices during a conservation campaign or dry year power cuts
“There is a high probability this will lead to an increase in wholesale energy costs every year to cover the possibility of occasional dry periods and therefore result in more hikes in prices for consumers,” Mr Sargent says.
While there are a number of positives in the proposals, these are far outweighed by major flaws.
