Power Reforms to have Perverse Consequences

On the 9th of December Gerry Brownlee announced plans to shake up the state owned power companies - in order to increase competition within the market. The shake up is an attempt to help stabilise rising electricity costs and increase security of supply, but there are a number of perverse consequences that will arise from these changes. It will be introduced in the house as the Electricity Industry Bill.

My first concern is the transfer of the hydroelectric stations Tekapo A and B from Meridian to Genesis, in exchange for the gas-fired Whirinaki power station. Meridian has built it's reputation as an energy supplier around being 100% renewable and this transfer of assets completely undermines Meridian's commercial image. The ability for consumers to chose their energy supplier is one of the few ways consumers can express their support for renewable energy in New Zealand. These choices provide economic signals for the market and should help guide the direction for future generation capacity. This particular asset swap will mean there is no longer a 100% renewable energy supplier in the market, reducing the consumers ability to encourage the uptake of renewables by exerting pressures on the market through choice.

My second concern is that the transfer of Tekapo A and B from Meridian will have dire consequences for security of supply. Currently, Meridian controls all eight hydroelectric power stations down the Waitaki River, but shifting control of Tekapo A and B will have downstream effects on the generation capacity of Meridians six other stations. Effectively allowing Genesis to hold Meridian at ransom and game the market, at the cost of the consumer - contrary to the aims of the reform.

The National Government should reconsider the asset swap proposed in Electricity Industry Bill, and I would urge the public to submit on this Bill during the Select Committee phase - especially in relation to consumer choice in the market to support renewable energy generation.