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Recently, EMA CEO, Kim Campbell, issued a media statement condemning the current high power prices and promises of a “price freeze” by Mighty River Power as inadequate. Campbell’s own words were that the so-called price freeze is “simply not enough”.
By the way, I refer to MRP’s price freeze as “so called” because, as CEO, Doug Heffernan stated,
“We are now confirming that for our customers there will be no increase in our energy prices for a further 15 months. However, there will likely be changes in customer pricing from April 1 due to variables over which we have no control that we pass through on our bills – such as transmission and distribution charges and any increases in metering costs due to regulatory requirements.”
With power supply clearly outstripping demand, electricity prices are now too high and should come down, the Employers and Manufacturers Association says.
“New Zealand clearly now has an excess of installed electricity capacity,” said Kim Campbell, EMA’s chief executive.
“Demand for power is well below the country’s generation capacity and its price should reduce to help stimulate New Zealand’s economic recovery and offset inflationary pressures forecast in other parts of the economy.
“At present projections the savings available to business and residential consumers would be at least $67 million a year, but we suspect it could be much more.
“Stating as Mighty River Power has, that they will not increase the electricity price for three years is simply not enough.
“The Major Electricity Users Group notes the futures price for wholesale power for the year from 1st April 2014 is 7.14 c/kWh, down 0.17 c/kWh for the year. In a competitive market this reduction would be reflected in wholesale costs which would be passed through to retail customers.
“MEUG calculates that an average household using 8,000 kWh per year would save at least $13.80 per year or $23 million for all households.
“For all businesses and residences the potential cost reductions amount to $67 million in 2014/15.
“To maximise competitiveness our electricity market structures need to ensure the lowest possible power price while signalling the right time to invest in future generation and transmission.
Unfortunately, Campbell then shoots himself in the proverbial foot by adding,
“The Labour/Greens electricity proposal to underprice our existing power assets is no answer.
“To spur on market competition businesses should seek out the best power deals at www.whatsmynumber.org.nz/mybusiness“
As I said, hasn’t that worked out well?!
So, if I understand Campbell’s stance on this problem; the LabourGreen proposal for NZ Power “is no answer“.
Instead, begging the power companies to drop their prices is Campbell’s only solution?!
Pathetic.
His “solution” is a do-nothing, beg-for-the-best, whilst New Zealanders are having to pay for higher and higher power prices.
To remind Campbell and his fellow businessmen and women; the more that we consumers pay for electricity –
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– the less disposable income we consumers have to spend on their goods and services.
Without drawing a bright, pretty, picture with crayons, I can’t make that simple truism any clearer to understand.
Which is why, when the EMA joined BusinessNZ in an ideological vendetta against the LabourGreen proposal, they were not only doing consumers a grave disservice – but also slitting their own financial throats.
The. More. We. Spend. On. Power, The. Less. We. Have. To. Spend. On. Other. Goods. And. Services.
Perhaps Campbell and his supposedly astute business colleagues should re-visit their position on NZ Power?
Who knows – it might actually be good for business!
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References
Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)
MoBIE: Power prices
Statistics New Zealand: The history of electricity reform
NZ Herald: Labour, Greens make power promise
Scoop media: Open Letter to Labour, Greens: Please Withdraw Your Policy
TV3: Mighty River Power promises price freeze until April 2015
Scoop media: Electricity prices should come down
Fairfax media: Business urges Opposition to dump power plans
Previous related blogposts
The Politics of Power and a Very Clear Choice – Part Tahi
The Politics of Power and a Very Clear Choice – Part Rua
The Politics of Power and a Very Clear Choice – Part Toru
The Politics of Power and a Very Clear Choice – Part Wha
It’s Official, The Sky Will Fall – Phil O’Reilly
Labour, Greens, NZ First, & Mana – A Bright Idea with electricity!
History Lesson – Tahi – Electricity Sector “reforms”.
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= fs =
Frank …. I fear that trying to convince Campbell et al of the bleeding obvious is not unlike pushing shit uphill.
Their loyalties are first and foremost to their ideology and the Party that supports it – and in the end, they think they (and those they represent) will do OK anyway because the Party will always chuck a bit more corporate welfare their way.
Of course it’s a self-defeating process, but such is the nature of those ‘true believers’ in an ideology that’s clearly failed.
Max Bradford’s “lower prices” are still “just round the corner” 14 years on – not unlike the “brighter future”.
On top of that, there’ll be a ‘true believer’ along shortly no doubt, to tell us how eft-pos transaction spending just broke records as some sort of proof that there’s a lot of disposable income about.
(debt bubble bubble toil and trouble)
The average domestic consumer to save $13.80 per year?
Are we are supposed to gasp in awe at this saving that the market will produce?
How many cartons of milk or cheese is that?
Multiply by two and an order of magnitude and it might realistically help those struggling with the results of the free market obscenity.
Indeed, Richard.
The phrase “Trickle Down” springs to mind – those famous two words from Roger Douglas.
$13.80 exemplies “trickle down” so well. It’s a trickle. Not much more.
I think its about a 1kg block of cheese and 2 litres of milk. Can’t wait!!
Tim, Richard…
The EMA seems to be wasting it’s time by pursuing the same strategy to force prices down.
What was it that Einstein said about the definition of unacy? Oh yes; doing the same thing over and over again and expecting different results.
Mr Campbell might take note…
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