ICYMI: 'A lack of competitive pressure'
Authority finds a lack of competition led to $70m worth of electricity overcharging when Meridian spilled water; Greens want structural separation; Woods eyeing new 'tools' to help lower prices
ICYMI: Morena. The Electricity Authority confirmed there was an ‘undesirable trading situation’ a year ago that meant the wholesale market overcharged customers by around $70m when Meridian Energy spilled water instead of generating cheap power.
“There was a lack of competitive pressure which meant prices remained relatively high despite an abundant supply of water and no increased demand during the period. Water was wasted when it could have been used to generate power,” EA CEO James Stevenson-Wallace said in the authority’s concluding report.
Flick Electric and the Greens again called for a Telecom-style ‘structural separation’ of the ‘gentailers’ such as Meridian, Genesis, Contact, Mercury and Trustpower, which both generate electricity and sell into the wholesale market, and also sell power to consumers and businesses. Energy Minister Megan Woods said she would look at giving the EA new tools to ensure competition. The EA will decide early next year whether to penalise Meridian.
The bigger picture here is Labour and the Greens see the electricity market as broken from a consumer point of view with smaller retailers bullied out of the market by the big players and consumer prices having risen much faster than costs for 20 years. This decision and the recent departure of EA Chairman Brent Layton will bolster efforts for reform. Options include the structural separation of the gentailers and/or the building of the Lake Onslow pumped hyrdo project, which would allow the Government to drip-feed water into the market to lower prices. The gentailers lost their social license some years ago and this is now coming home to roost.
Elsewhere, there was a frenzy of house selling in Queenstown yesterday, despite Tourism Minister Stuart Nash confirming he wants a special visitor levy to pay for infrastructure there. Again, Wellington wants to avoid borrowing to pay for local infrastructure, even though it benefits from local growth with higher GST and income taxes. No wonder Councils look for every opportunity to squash housing supply growth.
Overseas, overnight, the EU called for traffic links to Britain to be reopened and American economic activity slowed.
In our political economy
In the global political economy
New home sales and consumer confidence figures out this morning in America were weaker than expected as the latest wave of Covid-19 infections hit economic activity in the world’s largest economy.
The EU recommended this morning that European countries reopen their borders to Britain, while there were reports this morning France was about to agree to allow truck drivers who have tested negative for Covid-19 to start crossing the English Channel again.
Apple shares rose after Reuters reported it planned to produce an electric passenger vehicle by 2024.
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Meri Kirimehete. Have a great break.
Bernard
PS: Thanks to Amanda Main via Instagram for today’s pic.
Not just gentailers broken. Lines companies like Powerco are incentivised to maximise profit by applying for additional $$$ to replace infrastructure rather than address the changing landscape of renewable generation. Zero meaningful innovation in that space. And why are we not talking about the two existing hydro schemes that could be used for pumped hydro with costs in the hundreds of millions and coming online much faster than pumping billions into developing Onslow.