Heffernan says Labour’s power policy is nationalisation

September 2nd, 2014 at 11:00 am by David Farrar

The Herald reports:

Doug Heffernan is not a fan of what and the Greens plan to do to the electricity sector.

Dr Heffernan retired last Friday as chief executive of Mighty River Power after nearly 40 years in the industry, during which he witnessed radical structural changes.

He worked for the New Zealand Electricity Department and its corporatised successor, ECNZ. He was chief executive of Power New Zealand, before the local power companies were split into lines and retail energy businesses.

And he had been chief executive of Mighty River Power since it was carved out of ECNZ as a state-owned enterprise and latterly as a listed company under the mixed-ownership model. …

Under the NZED central planning model, nearly every generation investment decision was a bad one, he said, citing Marsden B (built to run on oil but which never generated a single kilowatt hour), the Clyde Dam with its massive over-runs and Huntly, designed to run on coal but which spent most of its life gas-fired.

“I’m old enough to remember the shortages in the 1970s because someone made the wrong decision about what plant to run. Same thing happened in 1992. We actually ran out of electricity,” he said.

California also has a single buyer model and they are warning they may need blackouts.

“That is what has surprised me over my career. To go from a position where you think the smartest brains would work out the best thing to do, to a system where a diversity of thinking has created far better outcomes.”

Dr Heffernan sees the single-buyer model as a form of . “They say, yes, it is someone else’s capital but we will control the outcomes. That’s equivalent of having nationalised the industry.”

Of their many bad policies, this is arguably the worst. Even the man they cite as the inspiration for the policy, Frank Wolak, has lashed it as being a very bad move.

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25 Responses to “Heffernan says Labour’s power policy is nationalisation”

  1. NK (1,200 comments) says:

    State monopolies always produce lower prices.

    [Tui ad goes here].

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  2. wreck1080 (3,853 comments) says:

    I agree it is bad to nationalise the power market but I also believe the current system is not working.

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  3. MT_Tinman (3,092 comments) says:

    Why is the most popular PM in NZ history not highlighting this sort of idiocy instead of lending credence to the stolen e-mails and the green-scum shit-stirrer?

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  4. kiwigunner (230 comments) says:

    Heffernan says Labour’s power policy is nationalisation.

    Well, he would wouldn’t he. He would probably also say that the ridiculously high power bills are fair enough and the equally ridiculous CEO remuneration and Directors Fees appropriate. Does this actually mean anything? Will there be a sister post at Whale Oil stating power prices are too low?

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  5. iMP (2,349 comments) says:

    This would be Doug the older brother of Terry (ex SoCred and other parties) who was National’s Port Hills candidate in 2008, but died of cancer a year later at a young age?

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  6. jawnbc (73 comments) says:

    And British Columbia retained its crown corporation structure for power. Result: the most inexpensive power in North America and some of the greenest power generation in the world. Also highly profitable.

    Someone with a vested interest (shares) whinging about a lack of support for a model that only benefits himself? Well that’s a shocker.

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  7. beautox (437 comments) says:

    The only reason they want to implement this crazy power policy is so they can take pleasure at fucking over the folks who invested their hard-earned money into power shares.

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  8. NK (1,200 comments) says:

    iMP – what’s the relevance of that?

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  9. YesWeDid (1,048 comments) says:

    ‘Same thing happened in 1992. We actually ran out of electricity’.

    No we didn’t, the government asked for voluntary reductions of 10% which lasted for about 2 months until increased water flows into the hydro lakes meant reductions were no longer needed.

    Improvements to the inter-island HVDC link now mean more power can be sent from the North Island to the South Island meaning hydro levels are no longer as critical an issue as they were in 1992.

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  10. Simon (726 comments) says:

    Good politics though. Which how John Key has run NZ for the last 6 yrs. Pot calling kettle black.

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  11. Berend de Boer (1,695 comments) says:

    DPF: Of their many bad policies, this is arguably the worst.

    This policy is the only reason why I prefer National comes back. National has no policies, Labour has this really bad one. What a pick we have this election.

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  12. G152 (264 comments) says:

    In the late 1950s and early 60s power was turned off on Sundays from noon to 4 as an energy saving exercise.

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  13. Lance (2,614 comments) says:

    So if it is a govt controlled (nationalized) the power buying model… who the fuck would build very very expensive power generation plants… except the govt?

    So if there is price controls, then the only possible next step is complete nationalization of the entire power system.

    And that will lead to cheaper power??????

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  14. publicwatchdog (2,486 comments) says:

    Yes – I can remember the bad old Department of Electricity and local Power Board days – when you could afford to have the heater on in winter and a soak in a hot bath.

    Penny Bright

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  15. stigie (1,053 comments) says:

    Penny, you can still leave the heater on now and soak in a hot bath if you dont pay your power bill….!

    Give it a try Penny ?

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  16. NK (1,200 comments) says:

    So can I Penny and to pay for it tax rates were 66% and we nearly went bankrupt.

    Aahhhh, the good ‘ole Mudloon days, aye. Weren’t they great – interest rates at 22%; carless days; milk shortages; powercuts – bring back Muldoon!

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  17. MT_Tinman (3,092 comments) says:

    NK

    Aahhhh, the good ‘ole Mudloon days, aye. Weren’t they great – interest rates at 22%;

    ?

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  18. NK (1,200 comments) says:

    Muldoon.

    Good for savings; terrible for investment.

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  19. Sir Cullen's Sidekick (866 comments) says:

    Add to this, Greens’ $18 minimum wage. Why don’t they simply make it $25?

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  20. Viking2 (11,338 comments) says:

    publicwatchdog (2,293 comments) says:
    September 2nd, 2014 at 12:24 pm

    Yes – I can remember the bad old Department of Electricity and local Power Board days – when you could afford to have the heater on in winter and a soak in a hot bath.

    Penny Bright
    ==============================================
    Tright Penny in a bath, oh my God what a sight.
    I’ll never eraze the image.

    And Penny are you really that old?
    Pension time then so you can pay your rates with pensioners discount.

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  21. J Bloggs (193 comments) says:

    Labour’s plan won’t work without complete nationalisation of the generation side of the industry.

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  22. insider (1,035 comments) says:

    All the current price rises are driven by regulated monopolies. So under labour there will be another, with the same result.

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  23. OneTrack (2,963 comments) says:

    “Heffernan says Labour’s power policy is nationalisation.”

    Heffernan is right.

    Of course the socialists/communists can promise the cheapest power. In their world, there won’t be any alternative so there will be nothing to compare it against to prove it is “cheaper”. And you wont have any other option anyway so the point will be moot.

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  24. Johnboy (15,890 comments) says:

    “And Penny are you really that old?”

    Soaking in all those cheap hot baths in the good old days wrinkled her horribly V2! :)

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  25. duggie (26 comments) says:

    “And British Columbia retained its crown corporation structure for power. Result: the most inexpensive power in North America and some of the greenest power generation in the world. Also highly profitable. ”

    Having recently returned from an extended OE in British Columbia I have to agree. Given the similarities in size, population, and generation mix, I am staggered by the difference in our power prices, and have yet to hear a satisfactory explanation why this is.
    I am also puzzled by the knee-jerk down votes given to such observations.

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