ODT on Labour and energy

October 6th, 2008 at 11:30 am by David Farrar

The ODT blasts Labour over high power prices:

Management inadequacies have been one of the features of the Clark Government in its leadership of the administration of public services and the guidance of enterprises whose activities have a crucial impact on our daily lives.

Yep.

One of the most obvious of these has been the failure, over most of the period from 1999, to put together as a matter of high priority a comprehensive plan for present and predicted demand and ensure it can be met with appropriate infrastructure.

The plan seems to be to hope for rain.

The self-serving Clark Government statement last week, that Contact Energy’s “alarming” 10%-12% planned price increases for its Dunedin consumers could not be justified, underlines the inadequacy of the response to energy supply and pricing issues.

Especially ironic as it comes at the same time they passed the ETS which will send prices up even more.

Nationally, household power prices have increased by an estimated 66% on average since 1999, when the Clark Government was elected, which is a rate way ahead of the rate of inflation.

And further increases to come.

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24 Responses to “ODT on Labour and energy”

  1. Murray (8,847 comments) says:

    “The plan seems to be to hope for rain.”

    That is unfair David. In fact they have a plan. The greens are going to dance naked under a full moon calling on Gaia for rain.

    The public may consider themsleves warned to avert their gaze during all full moons.

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  2. Glutaemus Maximus (2,207 comments) says:

    Contact are owned by who again?

    At least they haven’t sold critical infrastructure in Wellington to Chinese overseas interests!

    And slightly off topic>

    Suspicious:

    Redbaiter has gone to ground.

    A definite 9th Floor troll, with a brief to discredit the Right wing blogs!

    Why am I so sure?

    Never appears on WOBH, and for someone as BNP as it, a glaring omission.

    Never enquired about the Blogmobile, and how to meet up etc.

    Poor repressed homosexual. Boy or Girl?

    Can’t decide but a nasty invidious piece of work.

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  3. milo (525 comments) says:

    It’s a massive tax increase for the New Zealand public. Labour like vast profits from the power companies, as it goes into the government coffers as dividends and company tax. Worst of all, it’s a regressive tax, so it hurts the vulnerable far more than the rich.

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  4. Glutaemus Maximus (2,207 comments) says:

    So Cullen intends to soak the poor to pay for WFF, and their maximum tax cuts?

    Thats a bit nasty isn’t it?

    You look at any normal demand curve for basic utilities and you will see that it is VERY inflexible.

    Supply curve depends on rain however.

    What a bunch of cheating bastards

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  5. jafapete (757 comments) says:

    Aw, that’s a little unfair. When was the last time we had a “comprehensive energy plan”? 198…?

    The Labour-led government largely followed the policies it inherited from its (National) predecessor until it lost its nerve and started trying to second-guess the market with back-up capacity.

    No doubt the kiwiblog right, despite the comments about rain dances, would have preferred the government to continue trusting in the market (and the rainclouds) to provide. I would have preferred action from the start. (And if the ODT is going to criticise the inaction, why doesn’t it name names? Where’s Peter Hodgson from? Dunedin, you say?)

    Question. When did you, DPF, or the ODT start calling for a “comprehensive energy plan”?

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  6. Glutaemus Maximus (2,207 comments) says:

    Unfair?

    Are you serious?

    Another poison pill from Labour!

    Give in one hand and rape from the other. Sorry that was unfair because rapes are down?

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  7. Glutaemus Maximus (2,207 comments) says:

    jafapete, have you actually read ‘Absolute Power’ by Ian Wishart

    Have any of the paid subscribers on the standard read the book about lies, corruption, and bullying?

    So in 9 years Labour and the Luigi Party couldn’t make a business plan. Think you would never be able to live in the real world!

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  8. RRM (10,001 comments) says:

    “Management inadequacies have been one of the features of the Clark Government in its leadership of the administration of public services and the guidance of enterprises whose activities have a crucial impact on our daily lives.

    Yep.”

    So now Labour hasn’t been regulating ENOUGH, when that suits the purpose of the story of the day?

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  9. Glutaemus Maximus (2,207 comments) says:

    RRM, there is a huge difference between management and regulation!

    You should try it sometime!

    Where is your little mole Redbaiter?

    “Suspicious:

    Redbaiter has gone to ground.

    A definite 9th Floor troll, with a brief to discredit the Right wing blogs!

    Why am I so sure?

    Never appears on WOBH, and for someone as BNP as it, a glaring omission.

    Never enquired about the Blogmobile, and how to meet up etc.

    Poor repressed homosexual. Boy or Girl?

    Can’t decide but a nasty invidious piece of work.”

    You are all so mesmerised by “doublespeak” that you can’t see any reality!

    Bless.

    Soon to be redundant.

    Aaaah.

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  10. PhilBest (5,125 comments) says:

    “……. Nationally, household power prices have increased by an estimated 66% on average since 1999, when the Clark Government was elected, which is a rate way ahead of the rate of inflation.

    And further increases to come.”

    DPF, you said it.

    Who else can say “Carbon Credits”?

    Take a look at Ray Evans “The Chilling Costs of Climate Catastrophism” in Quadrant Magazine

    http://www.quadrant.org.au/blogs/doomed-planet/2008/09/the-chilling-costs-of-climate-catastrophism

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  11. PhilBest (5,125 comments) says:

    From “The Chilling Cost of Climate Catastrophism”

    “…….Garnaut has been at least partly honest in this regard. He has warned us to be ready for an increase in the price of petrol and diesel of about 15-20 cents per litre, and an increase in the price of electricity of at least 30 per cent, once his Emissions Trading Scheme (ETS) is in place. However, since these estimates are based on econometric models in which alternative sources of electricity are “assumed” into existence as a result of the market forces which these cost increases will generate, his assurances should not be taken seriously.

    A second device designed to sooth the electorate, is to use the emissions trading scheme which Garnaut is planning as a way of disguising from the community that the increased costs for petrol and electricity, which they are expected to accept gracefully, are taxes, pure and simple. The Garnaut proposal requires emitters of carbon dioxide such as power stations, oil refineries, cement manufacturers, for example, to bid for licences to emit, say, 1000 tonnes of carbon dioxide. The emissions thus paid for can be part of the process such as power generation, or embedded in the product, as in oil refineries. The proceeds from these auctions go to the government. Once issued, the licences can be bought and sold, just as taxi licences can be bought and sold. The difference between a CO2 emission licence and a taxi licence is that once the emitter has burnt his coal or sold his petrol, and sent his 1000 tonnes of CO2 into the atmosphere, that licence somehow becomes worthless. Who is to certify whether the piece of paper purporting to give the owner the right to emit this CO2 is valid or not? Does it have an expiry date on it? How is it to be validated? Can it be forged? How much will these processes of inspection and validation cost?

    A more immediate complication, not dreamt of by Ross Garnaut, nor Minister Penny Wong, nor Prime Minister Kevin Rudd, is the consequences to the balance sheets of all those companies, power generating companies in the Latrobe Valley, aluminium refining companies in Victoria, NSW and Queensland, LNG producing companies in WA and the NT, for example, which, as soon as the regulations requiring the purchase of emissions licences are promulgated, will have to place on their balance sheets contingent liabilities which will lead immediately to withdrawal of their bank loans. They will become bankrupt overnight, and the only possible purchaser for these assets is the state. It will be Northern Rock multiplied by at least ten. As in the UK, either the various State Governments, or the Commonwealth Government will have to up put very large sums of money to maintain the solvency of these power stations. The alternative is no electricity for the east coast of Australia…..”

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  12. PhilBest (5,125 comments) says:

    MORE:

    “……..The purpose of the implicit carbon taxes embodied in these emission licences is to force the shut-down of Australia’s coal-based power stations whether they are privately owned or have been resumed by the state.. As the quantity of emission licences are reduced, year by year, their auction price will rise, and the cost of running these power stations will increase. Electricity consumption will fall (that is the whole point of the carbon tax) even though under Garnaut’s proposals the energy intensive export industries such as aluminium smelting will be exempt from the tax and will actually increase production. Garnaut’s models assume that as the coal-based power stations become unprofitable and close, other non-carbon based electricity supplies will take their place.

    In his latest report Garnaut cites renewables, wind and solar, as providing the alternative. Wind generators provide power when the wind is strong enough to drive the turbine, but not so strong as to wreck the machine. The real costs of wind power are difficult to estimate. We do know that wind power is now economically viable only because it is heavily subsidised by electricity consumers in that ridiculous prices are paid for their output whenever they come on stream. A cost of $80 – $100 per Mwhr is probably a reasonable guess, but that does not include the costs of back-up which are substantial. Denmark is often cited as a successful example of wind-power, with 20 per cent of installed capacity coming from wind turbines. What these claims do not mention is that Denmark has the most expensive electricity in Europe, relies heavily on back-up power from Germany and Sweden, and that system reliability is now stretched beyond reasonable limits……”

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  13. insider (1,028 comments) says:

    Good point RRM. Just how will politicians deciding centrally what will and won’t get built make things better?

    How many people went without power in one of the worst hydro years in recorded history? Sounds like the system might actually work.

    And if you are concerned at price rises, thank goodness you don’t live in the UK – 30% rises this year. They are now facing a crunch over winter.

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  14. PhilBest (5,125 comments) says:

    AND:

    “……For the coal industry CCS (Carbon Capture and Storage) is a suicide note. Stripping the CO2 from the flue gas stream is expensive. Pipelining it hundreds of miles away is also expensive. The most recent CCS cost estimates for the Latrobe Valley brown-coal power stations, where the CO2 is to be injected into Bass Strait, is $160 per tonne of CO2, which is equivalent to an increase in the cost of electricity of $103 per MWhr. (Recall their current production costs of less than $30 per MWhr.) Such an impost would make these power stations worthless.

    One can only wonder at the extraordinary naivete of those coal industry leaders who have promoted this fantasy, have persuaded governments to take it seriously and to pour tax-payers’ money into pilot schemes, and who expect the Government to assume all future liabilities if the CO2 should leak back into the atmosphere…..

    “…….But their most brilliant feat of Orwellian newspeak was to replace the reality of a carbon tax with the fantasy of a “carbon price”, and to generate belief in “market mechanisms” as the best way of imposing a draconian reduction in the living standards of Australia’s working families. The Greens also realised that the creation of a rent-seeking class, which would profit from trading these licences to emit carbon dioxide, would give their project much-needed political clout.

    So a hungry and determined rent-seeking class has indeed been created. It includes bankers and financial traders of all kinds who believe there is serious money to be made from buying and selling emissions licences, which are in reality just tax receipts. Those who are in the wind turbine business are putting a lot of time and money into pushing the renewables barrow, and more and more wind turbines can be seen desecrating the sky-lines of our countryside. Scientists such as Graham Pearman, David Karoly, and the indefatigable Tim Flannery, who have built successful and profitable careers from riding in the global warming cart, are merely the tip of the iceberg. Underneath them are hundreds of younger scientists all dependent on the continuing unimpeded progress of the global warming cart for their professional careers.

    One immediate consequence of this unstable situation, a sort of neither war nor peace predicament, is that much needed investment in new coal fired power stations, in the brown coal fields particularly, cannot take place. We are already paying more for electricity than we should because generating companies are installing gas-turbine units which are cheap and quick to buy, but expensive to run, rather than embarking on the thankless task of building new brown-coal stations in order to met increasing demand. Those companies who bought the Victorian brown-coal power stations from the Kennett Government are now facing effective expropriation, and there is not much consolation for them in the takings clause of our Constitution. The NSW Treasurer, Michael Costa, who is desperate to sell the black coal power stations owned by the NSW Government in order to finance desperately needed infrastructure in Sydney, voiced his frustrations in a speech given on 3 April last. In The Australian on April 4 Imre Salusinszky wrote:

    Mr Costa said the “sovereign risk” associated with imposing a new carbon trading regime on Australian companies, combined with rigid emission targets, would result in a capital flight by overseas investors.

    “The Garnaut proposal has significant financial and economic impacts,” Mr Costa told the annual dinner of the Australian Chamber of Commerce and Industry. “The transitional effects could seriously disrupt critical sectors of the economy. The Rudd Government needs to proceed with caution and recognise that international investors, in particular, will be looking at how they treat existing property rights of asset owners.”

    He described the suggestion that no compensation was necessary for asset holders as, “absurd” and “unacceptable”. The NSW Labor Government is set to be among the big losers under the Garnaut model, with Mr Costa and NSW Premier Morris Iemma preparing to take about $10 billion worth of state-owned electricity assets to market next year. Mr Costa said his modelling showed the cost of carbon permits traded in the electricity industry could be as high as $120 billion by 2030, with a further $150 billion in adjustment costs. He warned the resulting increase in power prices could be much higher than the 10-15 per cent predicted by Professor Garnaut.

    The most serious longer term consequence, however, of the current state of the debate is the embargo which has been placed by the Victorian government on the development of a brown coal to distillate industry in the Latrobe Valley, an industry which could provide liquid fuel for Australia on the scale of the North West Shelf or Bass Strait.

    The coal to distillate process was invented by two German chemists, Franz Fischer and Hans Tropsch in the 1920s, and was used by the Nazi regime and Imperial Japan to provide liquid fuels for their war machines. Germany reached peak production in 1944 at 124,000 barrels per day. Victoria’s brown coal is well suited for this technology, since it is sulphur free. The brown coal reserves in Gippsland are vast, and the only barrier to very large private sector investment in such a project is the insistence by the Victorian government, (which stands to gain enormous royalties from such a development), that no emissions of carbon dioxide will be allowed.

    Current estimates of the long-term marginal cost of distillate from an modern Fischer-Tropsch process using Gippsland brown coal are typically $50 per barrel. This is very attractive at a time when world oil prices are moving between $100 and $120 per barrel. There is no guarantee of course that oil prices will remain at these levels. But with the Chinese and Indian economies growing at their current rates, and with oil reserves mostly located in politically unstable regions of the world, it would seem that investments of $50 – $100 billions in Victoria, provided statutory guarantees against expropriation through regulation or any other mechanism were on the table, would very quickly come into effect.

    These facts are not widely known. It is surprising that those companies which have already acquired mining leases with such projects in mind, have kept their ambitions very close to respective chests. If the people of Victoria knew that their State had the energy equivalent of the North West Shelf locked up in the brown coal reserves of Gippsland, and the only thing standing in the way of its development was Green hatred of carbon dioxide, then the political climate would change.

    Another strategy adopted by the Greens has been to transform the meaning of the word “market” into its opposite, a tactic which would today invite Orwell’s greatest scorn.

    A market is a place where property-owning people come to buy and sell their property at prices which are freely negotiated and which they accept as advantageous to their interests. The rules of the market have usually evolved over time, and they operate to ensure that transactions are free from fraud, and that contracts of sale are honoured. When the State decides to intervene in the rules and operations of a market, the results are usually perverse. For example when the Enron scandal burst in the US, Congress very quickly passed the Sarbanes-Oxley Act which sought to “reform” the listing requirements of the New York Stock Exchange. The main consequence has been the flight of many formerly listed companies to the London Stock Market, which has flourished mightily as a consequence.

    Garnaut’s so-called market for emissions permits are a modern variation on the old profession of tax-farming. What is being traded here are taxation receipts, and the value of them is determined in the first instance by the State, which is engaging in the most fundamental manifestation of sovereignty; that of taxing its citizens. As the State increases the severity of this tax regime by squeezing the supply of emissions permits, then those who trade in these tax receipts will speculate against the unpredictable actions of the sovereign, who may decide tomorrow that this whole carbon-climate-control thing is nonsense, and abandon the whole project…….”

    WAKE UP AND SMELL THE ROSES………

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  15. RRM (10,001 comments) says:

    Glutaemus: I myself neither manage nor regulate anything. I just work! (Not for the gummint.)

    I would dearly love to believe Ratbiter was just a plant to discredit Rightie blogs, it would be reassuring somehow to know that such scary mania is all fake. But over the years I have concluded from his persistence, his vehemence, his bitter curses and his quick shoot-from-the-hip responsiveness that he is real… all too real. We can only hope he is unique.

    (He does however have at least 3 little homeboys on these threads who try to be like him, though none can match the style or substance of His abuse – so far…)

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  16. Murray (8,847 comments) says:

    Another day another stupid.

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  17. RRM (10,001 comments) says:

    Speak of the devil!

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  18. Glutaemus Maximus (2,207 comments) says:

    The UK price increases are a function of our friends in Russia putting up the price of gas by 200%+

    There was a total lack of investment in Nuclear due to political dogma. And now in classic socialist flip flop, Nuclear is back on the Agenda again.

    Plus having an extra 1m bodies enter the country in the last 18 months has hardly helped matters.

    Whereas in NZ, there is no excuse!

    Dreadful policy planning, awful management, and a will to reclaim tax payer graft for the benefit of costly social experimentation.

    And like NZ, Labour are completely f***ed in the UK. Having just re-imported the biggest fraudster in political history.

    Hey, Helen should give Luigi something to do. All pay and no work. Nepotism at its very best.

    The Prime Mentalist needs therapy

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  19. Glutaemus Maximus (2,207 comments) says:

    If Redbaiter appears again, then let me know.

    I enjoy having a go at the great and the good. National and ACT will get the same treatment if they deviate.

    As for other posters, we are all the same. Philu is on planet tharg. But all other lefties are welcome to cross swords.

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  20. LC (162 comments) says:

    Anybody got any proposals to put forward then? A pebble bed reactor at the bottom of Queen Street perhaps? Or isueing shares held by the Govt in the various power companies to citizens so that the dividends come back to the users (I know sounds suspiciously socialist)

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  21. Glutaemus Maximus (2,207 comments) says:

    Why not sell all the power companies to the Chinese?

    That will give them the critical mass to reduce tariffs!

    Yeah Right.

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  22. PhilBest (5,125 comments) says:

    Redbaiter is real, and, as HE says about ME: “……one of the very few people who genuinely understands the nature of the Socialist beast……” There are very few of us who agree with virtually everything that Redbaiter holds, but I am proud to say I am one of them. I may succeed in keeping my cool and moderating my language more successfully than he does, but I completely understand (and even excuse, most of the time) his frustration and the effect on his blood pressure. I can’t help at least going “barf” or “spew” myself occaisionally.

    If you think he is a “one-off”, you need to read a few issues of “Free Radical”…….although he is more pro-Christian than most of them……I do sometimes suspect he is one of their regular contributors. And of course, he would be right at home among most of the US conservative right wing, bless ‘em…….

    Glutaemus: please clarify where you disagree with Redbaiter, because you seem like a good guy…..

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  23. writeups (4 comments) says:

    If the Electricity Commission and the Resource Management Act and all the other pieces of restrictive legislation weren’t in existence the worries we’d be having about power companies would be how the hell they could make a profit from such low power prices in such a competitive market with their massive nuclear plants all over the place.
    Bring on $10 a month power bills!

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  24. mummified (9 comments) says:

    The true failure of the Labour Government has been the ban on base-load thermal plants. When faced with a system that relies heavily on the vageries of climate, adequate thermal options are required.

    However, the talk of nuclear being the saviour is inaccurate for the simple fact that the New Zealand electricity system is not large enough to accomodate a nuclear power station. You would need to build a lot of expensive, small fast-starting diesel fired plants to cover for forced outages.

    Sure, small nuclear stations could be built, but the unit price for them would be very high, $10 a month power bills would just be a dream.

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