Business NZ Conference Part IV
September 3rd, 2008 at 12:59 pm by David FarrarThe Infrastructure Forum had six questions:
- How will you stop the risk of power blackouts?
- Will you privatise power generation SOEs to get more competition and lower prices?
- How will you get broadband into more homes and businesses?
- What changes will you make to the RMA?
- Do you support more protection for businesses at risk from the ETS?
- Do you support carbon credit allocation based on carbon intensity
Gerry Brownlee
- Energy Policy released details improvements to both security and supply. Planning for far more growth than Labour. Major consent decisions to be made within nine months
- No SOE sales
- Ran out of time
- Referred to in 1
- Not a yes/no answer but said credit allocation should be decided by a select committee process and a National ETS will do that. Gave a great example of how concrete plants in Europe will pay far less for carbon credits so just force industry offshore.
- Ran out of time
David Parker
- Record investment in energy under Labour. National did not invest in the 1990s
- No
- Broadband essential. $500 million fund next five years. WIll not favour incumbent.
- Does not accept RMA is a barrier
- Missed
- Missed
Jeanette Fitzsimons
- One can have security by over-building capacity so it is wasted every year but the peak year. Not efficient. Better to have a standby plant. Says we had a 1 in 60 dry year. Third way is make smart adjustments to demand to reduce at times of shortage and that is what is missing.
- Will not sell SOEs. Rejects that it would lead to lower prices.
- Supported LLU. Broadband key to reducing transport. But not support large state investment.
- Most changes Gerry wants to RMA already done. Problem is implementation and no national guidelines.
- Trade-exposed businesses are already highly protected. Some businesses may end up with surplus credits without reducing emissions.
- No – an intensity basis will lead to continued emissions.
Rodney Hide
- Does not think we can rule out all the power generation methods the Greens do. Need to reduce cost of capital by lowering taxes.
- Yes would sell them. No sense in Govt owing competitive businesses. Ownign them locks up taxpayers money and limits companies ability to raise capital for investment it deems necessary.
- Broadband important but regulation stopping its rollout. Need a stronger economy to be able to afford it. Against National’s policy in this area. Investment is slowing down due to uncertainity.
- Private property rights need to be enhanced, The RMA damages these rights.
Peter Dunne
- Rejects ideology. Needs security of supply. Say question is an alarmist straw man. Currently power is an un-cordinated jigsaw (so why are we paying $90 million a year to the Electricity Commission then). Agrees we have had over supply in past – supports smaller local plants but big hydro plants.
- I think it was a no.
- RMA needs national policy guidelines. DO not throw away RMA – streamline it and keep core principles.
- Missed.
- Do not support further protection to at risk businesses as we do not know enough about impact.
- No does not support but is subject to how the Act works out. Reason they oppose bill is because so much is uncertain and is being rushed through purely for political gain. Wants it passed by 1 April 2009.
Related posts:
- Business NZ Conference Part VI
- Business NZ Conference Part II
- Business NZ Conference Part V
- The growing power crisis
September 3rd, 2008 at 2:34 pm
Can you clarify how Rodney thought regulation was limiting investment and what the uncertainty was? I thought the point of the Telco Act was to promote network investment?
Vote:September 3rd, 2008 at 3:24 pm
Wow. Jeanett Fitsimons made sense with her first answer. It’s too easy to say ‘build build build’ when others are picking up the tab. What you need is to balance risk and ignore the vested interests with their hands out.
Vote:September 3rd, 2008 at 4:00 pm
Would’ve liked her to elaborate though!
Vote:September 3rd, 2008 at 4:36 pm
And at least she understands the connection between communication and transport.
Something which Cullen does not grasp at all.
Do a search under “Remote Office Centers” (use US spelling) to see how rapidly US entrepreneurs are responding to this new opportunity.
Vote:Houston with no zoning already has about seven from one company alone. The tightly zoned cities are struggling.
September 3rd, 2008 at 5:03 pm
Stephen
She probably did, just DPF paraphrased. What she’s saying is that some ie Brownlee seem hell bent on building over capacity so that there are no constraints anywhere to anyone accessing energy. Nice in theory but what happens is that the costs get socialised yet the gains may be very limited and specific.
Most of the time the system doesn’t operate anywhere near its capacity, so do you over construct the whole system at massive cost to deal with those few points in time it is stressed or do you just support those points in time?
It costs $25m a year to keep Whirinaki available without it even running. It has run this year for about two months, the first significant amount of time in almost four years so that’s about $100m to meet the demand in two or three months out of 48. That is a significant cost. Imagine how much more it would be if you overconstructed the whole system to permanantly meet that short term issue. It would be massive and that’s where the wasted investment she talks about comes in. She’s saying it would be better managing demand to cope with those times of ‘shortage’.
Vote:September 3rd, 2008 at 5:03 pm
Owen, I know someone who had to work from home due to moving cities – now they’ve quit so she can go work with ‘people’ again. Not for everyone. Ah well.
Vote:September 3rd, 2008 at 5:08 pm
Er, yes, good point on paraphrasing insider.
Aren’t our power prices socialised, seeing as all the power companies buy on the ‘spot market’ – may have a fundamental gap in my knowledge there.
Vote:September 3rd, 2008 at 5:23 pm
From Brownlee on ETS:
…credit allocation should be decided by a select committee process and a National ETS will do that.
I don’t understand how anyone who thinks markets are useful could think committee was a good way to allocate, well, anything.
Since when did ‘market’ become such a dirty word? Or does Gerry actually believe this?
Vote:September 3rd, 2008 at 5:32 pm
Can you clarify how Rodney thought regulation was limiting investment and what the uncertainty was? I thought the point of the Telco Act was to promote network investment?
I can answer that one. The Telco Act does promote investment in things that connect to the network being unbundled – things like DSLAMs and core transport – but it destroys incentives for investment in substitutes for what is unbundled, for two reasons. One, unbundled prices are usually so low that competitors, even those using other technologies, find it hard to make a return, and the unbundled firm also has trouble recovering any new investment, and so undersupply new investment in the network such as FTTH.
And two, the expropriation that goes with unbundling signals to investors that property rights in expensive, long lived fixed assets in NZ are not secure. That makes investors undersupply capital and the market undersupply infrastructure. And what we are now seeing is government stepping in to fill the breach.
It has been argued that unbundling promotes competition in the wrong part of the network. Anybody can put a DSLAM on the end of a piece of copper, what really matters is competition between competing forms of access. That’s the competition that unbundling destroys and, it is argued, the competition that does emerge from unbundling in its place isn’t nearly as valuable.
Vote:September 3rd, 2008 at 7:55 pm
ben, Brownlee’s answer was to the question “Do you support more protection for businesses at risk from the ETS?”
He supports taxpayer funded protection for business, the amount of which will be decided by a committee. A ‘free’ greenhouse gas market would not allow for government protection of business, it would force them to take into account the whole cost of that externality, straight away, as dictated by that particular market. Not sure if you support this or not, given that an ETS is inevitable unless ACT or the Greens cause a miracle in the form of a replacement in the form of a carbon tax.
[DPF: The trouble is though that the market may be in NZ only and if we are dumping huge carbon costs on industries which face international competition, then those industries will possibly just transfer offshore]
Vote:September 4th, 2008 at 7:27 am
Stephen
He supports taxpayer funded protection for business, the amount of which will be decided by a committee.
That’s not quite my reading of what he said. I took from Gerry’s comment that he was suggesting credits be allocated to industry and/or firms by committee – which is a recipe for disaster. You’re saying only the total value of credits to be allocated will be set by committee – with actual distribution to firms via some unspecified means.
I like your interpretation more but I’m not sure that’s what Gerry was saying.
A ‘free’ greenhouse gas market would not allow for government protection of business, it would force them to take into account the whole cost of that externality, straight away, as dictated by that particular market.
Not necessarily. The government could flood the market with permits initially thus making them cheap, and then pull supply back over time to bring business into compliance. The government would bear the initial cost of oversupply by purchasing international credits, those costs would be shifted to business over time, with the very great benefit of market-based allocation among firms and not committee.
Not that I think any of this is an especially good idea!
Vote:September 4th, 2008 at 8:20 am
I agree that is a problem.
Yeah Ben, I must admit that perhaps my mind just didn’t consider the possibility that he would want to do something like that, rather than perhaps just industry wide protection. Shit, I hope he doesn’t do it like that!
I am sometimes of the opinion that Brownlee is a knob – he’s not worried about that though.
Vote:September 4th, 2008 at 9:28 am
Of course telecommuting is not for everyone. Some people find their work is their main source of social interaction.
Vote:Others don’t.
However, the new idea of “Remote Office Centers” addresses this problem to some extent and is certainly taking off in the US, especially in lightly regulated markets like Houston.
There are telecommiting centres where a group of people can gather near to their homes to telecommute to a remote office.
So you might live in Albany, drive or walk a couple of blocks to your Remote Office Centre and join a dozen other people telecommuting to your headquarters in Queen Street or Penrose.
Go to: http://www.remoteofficecenters.com/
This is just one company.
Some people see problems. Others see opportunities.
September 4th, 2008 at 12:55 pm
Stephen
Are power prices socialised? Sort of. Every generator gets paid the same, as the market clearing price is set by the marginal generator, but production costs will differ as will marketing and distribution. If I can produce nergy at $1MW and get paid $10MW, I’m presumably doing better than the guy who produces at $9, and I;m likely selling more of my capacity. That should make me more competitive in the long run in terms of attracting customers etc and so good for consumers. There is a big question as to how this is playing out for consumers though.
Vote:September 4th, 2008 at 1:24 pm
Interesting Owen. Sounds good for very big companies at least.
Vote:September 4th, 2008 at 1:53 pm
insider, does the concept of using dams as batteries to when wind isn’t blowing hold much truck with you? Seeing as it doesn’t cost an awful lot to run turbines, unlike thermal plants which require ‘turning on’ and being fed a priced commodity, there is not so much cost involved with keeping a whole lot of windfarms around, so having a lot of spare capacity doesn’t hurt quite so much…?
Vote:September 4th, 2008 at 2:38 pm
Windfarms can be “Backed up” by hydro dams as storage up to the point where they are producing about 10% to 15% of the total demand. Beyond that every windfarm of tidal station must be backed up with an equivalent generator. (the actual percentage depends on distribution distances and distribution loadings.) THis is why the big wind producers in Europe are not planning on more wind power. They have hit the wall. Back up stations are extremely inefficient because for most of the time they are generating nothing.
Vote:So with wind and tidal (still an unproven technology which also requires back up four times a day) power it is really first come first served. Unless the taxpayer and consumer foots the bill for the back up. Geothermal power has the great benefit of being a stable reliable supply – but then, it’s nuclear.
September 4th, 2008 at 8:15 pm
…Minus the massive downsides. Ta.
Vote:September 4th, 2008 at 8:22 pm
deleted.
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