Thursday, August 13, 2009

Simple policy lesson on energy

The Electricity Commissioner position was created by the Clark Labour Government.

It was never needed before. Jim Anderton and Helen Clark were keen on Ministerial Inquiries into industries that had no fundamental problems.

The Electricity Commission isn't needed, nor is an Electricity Market Authority.

My first step would be to choose another electricity SOE to privatise. Although whilst National has promised to sell nothing, there is no reason why it cannot issue shares in an electricity SOE watering down the shareholding. Similarly, shares could be distributed to everyone. Private owners, after all, demand better performance and seek to be more competitive than the state.

Lines companies should be allowed to retail electricity, as the recent review recommends.

So hopefully Cabinet will agree on modest steps to liberalise and get crony bureaucrats out of the way - and so the question will arise as to why the government owns the majority of the generation and retail market.

1 comment:

Anonymous said...

Liberty

The reason it or some authority is needed is to break deadlocks which can have far greater impact than just on the parties concerned.

In the old days the industry was either a monopoly or a cartel. Things could either be done by fiat based on the thinking of the monopoly's management - which we would all pay for whether it was needed or not - or with nods and winks between executives, which we all pay for even though the major beneficiaries were likely the cartel managers.

The regulator was introdcued when the cartel broke down and people started disagreeing what needed to be done so nothing got done, which endangered the intgrity of the network. Fundamentally it was people refusing to pay even though they got benefits.

The difference with the power network compared to others is the speed of information/energy travel and the large impact a small problem in one place can have somewhere else eg cascade failure.

I'm not aware of anywhere that successfully runs a complex and integrated network without some form of authority. I've heard Argentina or some other SA country mentioned but not sure it really stands up to scrutiny

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