Major Electricity Consumers ask Labour and Greens to drop their nationalisation policy

An open letter says:

On Thursday 18 April you jointly announced your respective parties’ policy to take into the next election. We respect your right to announce new policy at any time. However, the timing and nature of the announcement has deeply troubled the New Zealand business community.

Business shares your concerns about constantly rising power prices and their impact on our global competitiveness. Businesses and consumers work hard every day to minimise their spending on electricity in order to stay in business and to make their household budgets stretch further.

However, we do not think that electricity policies based on subsidies and greater state control are the right answers. Such policies have been tried in the past and have been shown to be incapable of meeting the challenges of a modern economy with a complex, real-time electricity market.

Note that one of the ten signatories is the Major Electricity Users group. This is the group that represents the largest users of electricity in New Zealand, and who would benefit the most from policies that actually would work to sustainably reduce power prices.

’s aim is:

To add value to MEUG members’ management of electricity costs and risks through market intelligence, networking, facilitating solutions to improve competition, maintain reliability, promote efficient operations and regulate monopolies to achieve outcomes consistent with competitive markets for the long-term benefit of electricity consumers.

So be very clear – MEUG does support regulation to achieve better competition. But they rightfully say the regulation should be aimed at the monopoly aspects, not at the 14 generator companies.

Of particular concern with the policies announced is their chilling effect on investment across the entire economy. 

We are especially concerned at investment analyst reports noting the potential for $1.4 billion of shareholder value to be wiped off the books of the private power companies. A similar amount, if not more, will come off the value of the public power companies.

Capital destruction on such a scale will severely undermine business confidence. It sends signals to investors, on whom the New Zealand economy relies, that their wealth and the benefits it provides are not welcome. Investment plans and job creation opportunities are foregone.

Rather than remote and intangible, this dampening of investment intentions will have a direct and real economic impact on those of all walks of life who seek to accumulate wealth by working hard to save, invest and grow. It causes interest rates to rise, depletes retirement savings held in KiwiSaver accounts and means that other economic opportunities such as first homes are foregone and new business ventures as savings are unexpectedly reduced. Individuals are less well-off as a result.

No one at all believes this policy will be a one off. If Labour and Greens get to effectively nationalise 14 energy generators, then why would they stop there?

Investors are stunned by this policy from Labour. They expect it from the Greens, but most people thought that Muldoonist price controls were a relic of the 1970s and not a serious policy proposition 40 years later. But for some reason Labour seems determined to outflank the Greens on the far left.

Most businesses would love to have cheaper electricity. Who wouldn’t? But they know the way to achieve that is by improving competition, not abolishing it.

Comments (77)

Login to comment or vote

Add a Comment

%d bloggers like this: