You might wonder how NZ is stacking up in the energy savings stakes. Well, I have just written this article in response to a NZ Herald article suggesting that power demand is flat in NZ. We need to remember of course that the population growth rate is also flat. But there are other factors as well. Consider the issues here.
NZ power is among the most expensive in the world. My power bills here are as much as I would pay in the Philippines or Japan; the most expensive countries for power in the world. The difference of course is the following:
1. Japan imports all its coal, uranium and gas (as LNG), and the Philippines is very similar; even worse in the sense that most of its power is purchased from independent foreign companies under very unfavourable contractual terms accepted by the Ramos administration.
2. NZ power costs of production on average are the lowest in the world thanks to the fact that 70% of electricity generation comes from 'free fuel' hydro plants, the capital cost of which was fully-written off over 40 years of operation, but recapitalised when these corporations were sold off. Was this a good divestment for NZ? I suggest not given the lack of real and effective competition because all electricity is now sold at prices to justify small increments of electricity capacity increase at the 'margin' to meet demand. In fact, with flat population growth, there is little real need for new capacity. So why the increase in prices? Well, I guess its because the operators can, and their shareholders demand, stronger profit growth that they can deliver. Its a choice between investing offshore, in which case they are a minor player, or extorting wealth from NZ. Yep, you guessed it, extortion is more profitable and safer given that you already have the relationships with business.
If memory serves me correctly, these assets were sold by a Labour government, and supported by the National Party. It was not good decision-making given that:
1. These assets were sold too cheaply to foreigners
2. High electricity prices are an obstacle to national savings and investment
I guess, if you are a greenie, high electricity prices are good for the environment, because paying exorbitant prices diminishes your capacity to afford electricity. So you can well appreciate the 'post-industrial' lifestyle of the cavemen because you will be living in a nirvana when you can't afford what they could not even conceive of.
The good news is that real wealth generation is occurring as well as the extortion. The extortion is really just a means by which business offset the cost of government, i.e. Basically business passes these costs of government on to the consumer in higher prices, because government is an 'instrument of the people, apparently for the people'. You might want to question that wisdom. hehe. Universal suffrage was not such a good game plan after all. hehe.
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