01 October 2008

Contact Energy prices rises are an opportunity

So according to the NZ Herald, Contact Energy, a privately owned electricity generator and retailer raises its prices. It is reported that "Commerce Minister Lianne Dalziel said she failed to see how Contact Energy's increases could be justified".

Contact Energy shouldn't have to justify to her. Especially since the government owns Contact's three biggest competitors. You see, it is an open market. The government if it was a responsible shareholder would be pleased that Contact offers its electricity companies an opportunity to compete. Meridian, Genesis and Mighty River Power could all now offer lower prices than Contact, and consumers would win, the government would win and Contact would decide how to respond.

Don't expect that to happen though, Labour Cabinet Ministers are scrambling for an inquiry. Muldoon like, they want a justification from a private company for a price increase in a competitive market.

National's response? To criticise Labour for not doing something soon enough!! What would National do? Blank out - nothing. Mindless politicking for the sake of it. The right response would be to say "National broke up the state owned ECNZ monopoly when it was in power so New Zealanders could have choice and competition in their electricity providers. The recent price rise announced by Contact is an opportunity for New Zealanders to shop around with other suppliers, and for those providers to compete. Sadly as three of the main competitors are state owned, we anticipate they wont be that nimble and responsive as they may well be in private ownership".

Grey Power punts up its usual Muldoonist socialist racist whining "This is a classic case of greedy foreign companies ripping off New Zealanders" says Les Howard, Grey Power President. Les, choose another company. You couldn't when your mate Rob was in power, now you can, go on choose a less greedy state owned company!

Meanwhile, isn't it about time that Genesis, Meridian and Mighty River Power were all privatised too, so that the market could thrive, and new capital be injected into electricity generation?

So stop moaning, change supplier and don't complain when a state owned company raises power prices - you don't want to vote for a party that privatises do you?


Anonymous said...

Nice libertarian theory

but basically crap because NZ simply isn't big enough for more than one power company

I agree all the companies should be privitasied immediately - not stupidly to try to raise the best price, but simply give them away to whoever will take them.

in the medium term, however, we should expect all the companies to be bought by a single provider. That is fine, it's called the market

and the NZ would have to pay the real cost of power. Most of South Auckland wouldn't be able to afford it - but, frankly, fuck 'em. They don't deserve it.

The first question for NZ should be whether we want our power lines to be sold for scrap and generators shipped overseas to where people appreciate them.

If we don't we need to pay market price for power.

if not, well we can fuck off too.

Libertyscott said...

Yet there are six power companies. I am sure you think it isn't big enough for one airline, yet there are three.

The power companies would be worth quite a lot if sold, because they are quite well run and the supply of electricity is short.