LabGreen power plan would be worse

11/02/2014

The LabourGreen power plan would be worse for consumers than the current system.

The electricity market in New Zealand is extremely competitive, with consumers able to switch retailers to gain lower prices, and more consumers using metering and home energy management systems to save more. But the electricity proposals of the Labour and Greens parties would be less able than the current market to meet consumer needs.

These are among the key findings of an analysis of the electricity market commissioned by BusinessNZ and undertaken by Sapere Research Group.

BusinessNZ Chief Executive Phil O’Reilly says it is valuable to get rigorous analysis on a sector that is complex and sometimes poorly understood.

“The electricity market was established in 1996 and has operated under changing rules since then. The research makes it clear that under the current 2010 rules, the electricity market is developing towards a highly competitive, well-functioning market.

“The electricity market’s greatest problem has been a lack of transparency around prices. Energy companies have not explained price changes clearly enough, and this has led to doubts about whether prices have been unnecessarily high in the past. BusinessNZ is recommending that energy companies ensure that the reasons for future price changes are meticulously itemised. We also recommend investigating whether we should have rules for information disclosure around price setting.

“The Sapere research also notes that a segment of the market may be experiencing energy hardship in having to spend too great a proportion of their income on house heating. BusinessNZ recommends investigating options for policies within the market and the social welfare system to help alleviate this,” Mr O’Reilly said.

Sapere found the electricity market is achieving positive outcomes against five key criteria:
1. Secure supply of electricity
2. Efficient operation and market transactions
3. Efficient investment in assets
4. Social requirements
5. Environmental requirements

Sapere also analysed NZ Power proposals (Labour and Greens policies) against the same criteria. Sapere concluded that these policies would be less able than the current market to meet the five criteria, and would not resolve transparency or energy hardship problems. . .

The Labour Green power plan would make the electricity supply less secure, lead to less efficiency in operation and market transactions, less efficiency in investment, poorer social requirements and poorer environmental requirements.

Rather than fixing any problems, real or perceived, it would exacerbate them and the people who would be most disadvantaged by the added costs and poorer efficiency would be those least able to afford them.

That isn’t unusual when ideology comes before practical considerations.

Key findings of the report are:

• Outcomes under all of the public policy goals are for the most part positive but there are some areas where more effort should be applied
• Security of supply has improved under the market, and investment in generation, transmission, and distribution assets is keeping ahead of demand without government subsidy or direction
• Retail electricity price increases have not been transparent enough
• There appears to be insufficient action to address energy hardship experienced by some consumers who live in houses that are too cold and damp
• The NZ Power proposal would be less able than the current market to deliver against the five goals, and would not resolve transparency or energy hardship problems

BusinessNZ recommendations:
• Retain current electricity market framework as superior to the alternatives across a range of desirable policy objectives

• Aggressively pursue net-benefit positive improvements to the efficiency of the current market arrangements by improving price transparency:
i. Investigate rules for information disclosure around price setting
ii. Fast-track Electricity Authority and MBIE workstreams on price transparency

• Confirm the nature and size of the issue of energy hardship, acknowledging that efforts by the electricity market will benefit those affected only marginally

• Implement options to aid those experiencing energy hardship, in a systematic, whole of-government way (including the appointment of a lead agency), such as:
i. Requiring landlords who receive state money to make their houses available for social housing to submit their houses to a ‘warrant of fitness’
ii. Replacing the poorly targeted Low Fixed User Charge with a better initiative
iii. Reviewing initiatives in health and welfare that can help address energy hardship

The full report is here.


MAF shortcomings, MPI responds

05/07/2012

The independent report into the Psa incursion which has had such a devastating affect on kiwifruit orchards has  found shortcomings in systems and processes of what was then the Ministry of Agriculture and Forestry.

It is up to what is now the Ministry of Primary Industry to respond swiftly and Director-General Wayne McNee has:

“The review has found shortcomings in the way MPI’s (then MAF) systems and processes were applied to the importation of kiwifruit, kiwifruit pollen, kiwifruit nursery stock, kiwifruit seeds and horticultural equipment, prior to the Psa outbreak.

“While the review also says that it does not automatically follow that these shortcomings contributed to the entry of Psa-V into New Zealand, improvements are needed, and MPI is moving immediately to implement those improvements,” Mr McNee said.

“The Ministry will implement all six recommendations from the review and will report to the Minister for Primary Industries in three months time on progress.”

Mr McNee said the review had found that although the biosecurity risks associated with the importing of goods could never be entirely mitigated, protections could be improved by MPI, industry and Crown Research Institutes working more closely to understand emerging risks.

Federated Farmers calls the report a robust but positive wake-up call.

Federated Farmers is convinced the independent and robust Sapere Research Group review into the entry of Psa will lead to significant improvements at the border.

“The old MAF was so confident in its import health standard for pollen, it said there was no peer-reviewed scientific evidence pollen was a pathway for bacteria,” says Dr William Rolleston, Federated Farmers Vice-President and spokesperson on biosecurity

“That contrasts strongly with the independent Sapere Research Group review of how Psa entered New Zealand. This review provides policy makers with a model for independently conducted post-border incursion investigations.

“The Sapere review cuts to the chase.  We can give credit to the new Ministry for Primary Industries (MPI) for opening itself up to soul searching analysis.  That said, it comes against a $410 million backdrop; the projected cost of this biosecurity failure.

“Even in tough economic times, Federated Farmers believes there should be more resources for biosecurity than just reprioritising current ones.

“We need biosecurity to be robust because it is our first and last line of environmental and economic defence.  Any homeowner knows scrimping on insurance is a false economy when you need to claim against it.  Incursions like Psa not only cost export revenue but jobs too.

“Biosecurity is a tangible feature driving our overall reputation as an exporter and as a destination.  Tourism is a risk vector, but benefits from high levels of biosecurity being maintained. We suggest passenger and cargo levies could be used to build a response fund.

“While the report doesn’t mention it, we also need robust systems to identify emerging disease threats and developments.

“Government Industry Agreements are an opportunity for the MPI to integrate information and improve communication with industry.  Yet the primary industries shouldn’t just leave biosecurity to government as ‘its job’.  We are pleased this report confirms recent moves by the MPI to give farmers a greater say on border protection.

“One practical example of what Federated Farmers wants to see reinstated is the Animal and Plant Biosecurity Consultative Committees.  Disbanded under the old MAF, they provided a valuable exchange of information between industry and the Ministry.

“We believe the MPI now has a golden opportunity to integrate them within Government Industry Agreement frameworks,” Dr Rolleston concluded.

The Psa, incursion has been to the kiwifruit industry what foot and mouth disease could be for livestock farming.

Whole orchards have been infected, businesses – and retirement plans – destroyed and millions of dollars lost from the local and national economy.

The response to the incursion was swift but that is no comfort for those whose vines were infected.

It might not have been shortcomings in MAF procedures which allowed the importation of the infection but MPI isn’t making excuses and is implementing all six recommendations in the report.

Every traveller and import could potentially carry something that poses a risk to our plants and livestock. It is impossible to have 100% protection against that but the adoption by MPI  of the recommendations should ensure an improvement in bio-security at our borders.

MPI’s response and action plan is here.


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