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The Government may be selling the electricity SOEs at the top of the market; Bernard Hickey reviews whether this is good for investors. Your view?

The Government may be selling the electricity SOEs at the top of the market; Bernard Hickey reviews whether this is good for investors. Your view?

By Bernard Hickey

There's been a lot of noise around the government's plans to float Mighty River Power, Meridian Energy and Genesis Energy before the next election, but little of it is helping investors think about whether these shares might actually be good investments.

The debate has been around whether the floats are a good idea for taxpayers generally ,and whether the sales may be blocked or delayed by the Waitangi Tribunal's review of water rights.

The assumption of both investors and the SOE floats' political opponents is that they will, of course, be a brilliant buy for investors.

The opponents of the floats say it makes no economic sense to sell off massively profitable and cash generating assets with monopolistic characteristics to private investors.

Those in favour of the sales say New Zealand's stock market needs these sort of high dividend yielding companies with established track records to lure conservative investors back to the market.

Few on either side of the debate have questioned that strong profits, high dividends and ever-rising share prices are inevitable for the three state-owned power generators.

But this is far from certain, particularly given some big changes in our power consumption habits and the risks of more to come.

The widespread assumption is that New Zealanders' demand for electricity is insatiable and the only question is how we can generate the extra money needed to build new power plants. That has been the historic picture.

New Zealanders kept adding gadgets and heaters to their houses. Factories and farms got bigger and used more power-hungry machines. It seemed as if every whereever we turned there was another device or screen or charger plugged in and humming.

But that has changed. Ministry of Economic Development (MED) figures show total observed electricity consumption has fallen in three of the last four years.

The MED data, dating back to 1975, records only one other annual fall, in 1992. Something is changing here. Export manufacturing operations have been closing down in recent years to move offshore and thousands of houses have been insulated and 'heat-pumped'. The long recession after the Global Financial Crisis has deepened the slump in demand for power.

And it doesn't end there.

Norske Skog announced this month it was halving production at its power-hungry Kawerau pulp and paper plant because of falling global demand for newsprint. The plant generates 2.9% of New Zealand's power demand.

Also earlier this month, Rio Tinto's Pacific Aluminium approached Meridian Energy to renegotiate its contract to supply electricity from its Manapouri station to the Tiwai Point aluminium smelter in Bluff.

Rio Tinto is grappling with weak aluminium prices globally as Chinese demand growth slows and supply increases from a rash of more modern and cheaper smelters opened in China. It may shut the smelter, freeing up 15% of New Zealand's electricity supply to be fed back into the grid. Transpower has said it could easily upgrade its lines in the South Island to feed that power into the grid.

This creates the risk of a perfect storm for power generators: a surge of new supply coming onto the market just as demand is drying up.

Even in the electricity market, where many wonder just how competitive it really is, this would put downward pressure on prices, profits and dividends.

Maybe the 'sure thing' SOE floats aren't such sure things after all and individual investors will have to assess the risks of losing money against the hope of making money at the taxpayers expense.

This is no one-way bet.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Good  .....that'll  save them from investing in a possible " s(t)inker " ...... much safer to invest in finance companies , ay Bernard !
( The finance companies which sank , and took several billion dollars of hard saved Kiwi money , were NZ made & operated ...... nice to keep it all in house , and to exclude those incompetent , cheating , greedy foreigners )

...But that has changed. Ministry of Economic Development (MED) figures show total observed electricity consumption has fallen in three of the last four years.
Did the entitled muppets running these energy resale units think to lower the price? - not on your life. Mindless lifestyle preservation rates much higher than business survival as a plan of action for most New Zealanders pretending they are business people.
It saddens me that the so-called alert market savvy personnel operating in this not so fair land have limited ability to uncircle an enveloping vicious circle.

Very good point. Demand was down so they put prices up. Am sure if demand had gone up they would have put prices up on the basis demand was up. It seems very optimistic to think that under private owners these companies will suddenly become much more altruistic. At least that answers Bernard's question; the companies are still probably a pretty good investment.
Electricity is not an importable resource, so there will not suddenly be an offshore player with some excess capacity to offload at marginal cost plus a bit.  And why would the local players not act like a cosy oligopoly?

Trouble is it will be priced accordingly.....oh and look at Contacts share prices for the last 4 years.....way down gone from somewhere in the 8s to somewhat in the 5s......tidy loss that.
There is the assumption that we will get back to growth and higher use.....I suspect as the price increases the we wont see much higher consumption.....though peak use will be interesting to watch....about the only ones doing well are the banks....

And while the entitled muppets act in their own self interest - we the taxpayer are subsidising home insulation because the average family can't afford to turn their electrical heaters on.
Absolute hypocrisy from government given they (we) own these generators.

And there's more
Big power users say the country could pay hundreds of millions a year more for electricity, if grid company Transpower and other lines companies win legal cases to lift returns on their assets.
That could translate into household power bills rising almost 3 per cent if Transpower gets its way in court in a case starting next month and another 5 per cent if lines companies follow suit, according to Major Electricity Users' Group calculations.

The simple fact is, if that's the way it plays out, and we don't get some decent dividend paying stocks onto our share market within the next 12 months, the money that I have set aside to buy into these SOEs/NZ companies will go into some pretty good ones in Australia (frankly where alot of my other investments are) and before the middle of next year, all other things being equal.
Why don't we just complete the job and totally knee cap our capital markets, and force all our businesses away from NZ to countries where they actually can get investors with capital. 

Selling state assets in order to prop up the NZX50 seems to be the weakest of all the arguements for the sales and smacks of desperation on both the part of the govt and the NZX which has been going backwards for years mainly because local and foreign investors see it as the wild west without adequate regulation and protection. For all the good PR he got and nice salary and bonuses, the last CEO did little to change that. The new guy wants to substantially grow derivative trading of all things.

I don't really understand how you (or others) investing in the power companies will make any difference to the other businesses on the NZX. Can you explain it to me?

So the argument goes something like:
trading on the NZX is currently a little stagnant. By introducing a large value worth of new stocks onto this sharemarket, we expect trading to increase (in volume or frequency or whatever)
More trading is a good thing because: a) it increases liquidity, making it easier for a current stockholder to find a buyer for their shares so that they can make a different investment; and b) larger total value of stock on the market makes it a more attractive place to trade because of potential gains. With more people attracted to this market, the chances of them taking a punt on other companies within that market is increased
In other words, other players within the market are able to extract some kind of rents from the increased activity in the market overall

To summarise mist's answer benwave, the NZX is a much smaller casino than overseas markets and without IPO's/new share offers/capital raising rather than borrowing (ie, new gaming tables) to lure new gamblers it doesn't make much difference.  In the end it is no different than buying and selling property, hoping you can sell your shares for more than you paid for them.
Is that part of the problem with the NZX though - we're just too small a market and it's cheaper to borrow than raise capital?
Are NZ'rs overly cautious after the 87 crash or are overseas investors too quick to forget history and put too much faith in the stock market?

So it's like a marketing problem, in a way? We're trying to set up our bake sale stands at the county fair, but nobody's coming because the hit band 'Housing Market' is playing a cheap gig next door?

NZ Heads - please explain, the cash from the sale is going to NZers and will buy new assets for NZers, and much of that cash they get will come from other NZers - where are NZers missing out ? ,,,what you're saying is you'd prefer debt...have you not learned anything about what's going on in the world, or are you just totally brainwashed  ?

WFF , interest-free loans , rental supplements ...... there's alotta important stuff which must - absolutely must - be propped up by selling these SOE's .....
...... until next year , when the SOE's are off the books ....
But the bill for all the " entitlements " comes around again ....

Yup Gummy, and the other way to look at it is, whilst the majority seemingly want to have all that otherwise unaffordable stuff, they're gonna have to sell some stuff, or increase debt to keep getting it 

I'm not sure that when you are already massively in debt, that selling your last assets is in fact the right answer. All our fiscal history suggests the government will in fact just blow through the funds at $1 billion a month. (Our operating deficit this year is $8.8 billion in 8 months). Meanwhile our macro current account/ exchange rate/ Reserve Bank governance paradigm means we are also stuck in a $300 million a week addiction to foreign money. Both of these facts mean inevtiably the power companies will end up offshore controlled, both in their shareholding and or in debt they will build up privately. (MRP already owes over $1 billion in foreign debt)
Selling the assets merely delays addressing some more fundamental issues; while in the meantime we won't own some very important infrastructure.
As it happens if we fixed those paradigms, I wouldn't then mind giving the NZX a shot at some decent companies, but in the meantime, that is a poor justification. As you note, it is very easy to invest through the ASX in any case, and from a current account point of view, great that you are.

Stephen L
"Massively" ?.....I guess that says something about the world when NZ has the second lowest debt to GDP ratio (36%) next to Australia when you include Europe(87%), the UK (68%) and the USA (100%)...but yes, its definitely uncomfortable I grant you.
But I do think they're doing something about it. With zero budgets for the past 2 years, or is it three, we have a Govt finally prepared to tackle it, and assets sales are only a component of that. And its certainly not a case of selling off your "last assets", its just a very small component of the Govt's assets, and indeed, a minority holding in what they are selling. Add in the benefit it will provide to the capital markets, our companies ability to get capital to expand and employ, and an opportunity for our investors/retirees to invest into reasonable safe divedend producing assets, I'm very comfort.
What anoys me the most is the slogan driven rhetoric  that comes from many of the opponents (not including you here Stephen as many aren't in the boat). I well remember on successive ocassions striking up conversations with Green petitioners on the street who's knowledge of the issue that they were so fermently promoting, came down to a few slogans which was all they could repeat in verbitam.   

Am sure you are aware that our main debt problem is private debt which is very high at over 100% of GDP (and which is why I bang on about the current account deficit, rather than focus on the fiscal deficit). Calling the government budgets zero budgets is also a nice euphemism, when they are actually adding to the deficit at $12 billion per annum. This isn't really the subject forum, but in my view the steps that could be taken to fix the current account  (the cause or effect, you choose, of extra private debt) would actually be easier to implement than the politics of fixing the fiscal one; and those steps would almost certainly help reduce unemployment and welfare and so lead to a lower deficit.
Selling assets does just delay those decisions.
Not many other government assets are really saleable. Roads, hospitals, schools, universities, national parks? I don't really think so.
The power companies are the last real saleable silverware in the family cabinet. 

Zero Budgets for the last 2 or 3 years?  Which parallel universe was this happening in?
The Nats have been borrowing and spending like crazy.!!!

zero budget increases....

They are selling schools and prisons- through PPPs- guaranteed income streams for private investors paid for by us . So yes JK has plenty motre to sell, he is a one trick, barrow boy, not very clever but with a good sales manner, well practiced at taking abuse. It is all water off a ducks back to him.

"...a few slogans which was all they could repeat in verbitam."
too funny. you're doing the same thing with nationals talking points. 
This household debt graph is your new best friend and your new talking point - remember private debt quickly becomes public debt these days, but you already know that, because you're very well informed of all the issue unlike that 'slogan' greenies ;)
PS on the sidewalks are you expecting academic discussions, using 3G tablets to access data and compare economic models and current exchange rates. maybe segwaying into the origins of money, taking into account energy consumption as the main indicator of a the soft or hard landing of china economy, or that industiral electricity consumption as a better measure than the official 'man-made' economic data from there.  everything else is just sloganeering.

Why do we need to own it?  as long as we control pesky voters are already complaining, no pollie will survive an Enron here...
Personally I see a depression coming so shares will collapse in price and value....when that happens its best foreigners hold those way over-priced shares IHMO.

They just don't have the political will to get rid of that stuff, and neither will Labour who put it all in there in the first place - but we live in hope that some courage will be seen sooner rather than later

Grant A, I would not bank on it. It never ceases to amaze me how far Polies of any stripe will prostitute themselves  to an insatiable constituency eg, when I was in England last year I witnessed Cameron expand a government department that rescues overseas holiday makers that run out of money, by guaranteeing their credit cards. These are debt ridden Brittons beyond their means in the Greek Islands who should juat be catching the train home from Blackpool. By the time I left Cameron's folly had already lost 50 million quid! I think Plato said something about democracy dispensing to the wise and fools at the same time.
Regards, Ergophobia

what stuff?

Well now, all you complainers.   Didn't like Dr Don Brash much, did you?
Thought his Orwea speech, about Kiwi not Iwi, a bit too extreme for you?
Thought he was a red neck.
Offended your sense of fair play did it?  Whilst sipping your stupid Latte and buying your stupid rotting dung heap in Glen Lynne
Well now, witness your taxpayer assets, those that you, and past generations worked for, being put on the block.
You are going to be screwed over not once, but twice.
1) There is no block to foreign ownership of shares in these companies. None what so ever.
2) You are going to be extorted by a non elected Maori Council for the privilege of the above.
You get what you deserve.

un-fortunately the ones getting screwed wont be the ones who are responsible.

I want know if aging power stations are really assets at all? Seems to me that at a certain age they are going to require alot of capital investment to keep them going. Their returns suggest putting money in the bank on deposit generates a similar return. Why all the fuss?

Yep..........though I suspect we will be nationalising strategic assets in the future (watching Argentina with interest)....or better legislate/regulate to the point foreigners hand them back to us for free.

exactly right

Greed....and the fear of missing out...

So the sharks want to feed. The Q is with all these private companies in the NZX why do need,
"Those in favour of the sales say New Zealand's stock market needs these sort of high dividend yielding companies with established track records to lure conservative investors back to the market."
So lets see I guess the value has been gutted out of the private and therefore badly run companies. The advantages  in information and (reaction)- time is in the hands of the non-"conservative investors" and share brokers....or the sharks.
Fools dip their toes in.....

Talking of sharks!

If you Like NAFTA, You’ll Love the Trans Pacific Partnership

We, the transnational corporations and the ruling elites are on the verge of a wonderful new dawn that will bring us immense power and untold wealth.
We have been secretly negotiating a new agreement called the Trans Pacific Partnership (TPP) with the United States Australia, Brunei, Chile, New Zealand, Peru, Singapore, Malaysia and Vietnam and are nearing completing the final details of this agreement. We have had 600 of our corporate lobbyists providing input and have successfully excluded Congress, our own corporate media, and the general public from the negotiations. Once implemented, this agreement will hard code corporate dominance over sovereign governments into international law that will supercede any federal, state, or local laws of any member country. This agreement will grant new corporate privileges and rights, while limiting governments and protective regulations. This agreement will far exceed anything we have been able to achieve with NAFTA, CAFTA, or any other free trade agreement.
Read on


Prosperopink - the TPP is highly concerning. I have read small bits of information and am highly concerned at what is being disgussd. Is it true that the TPP details wont be released for 4 years after the signing? Also what about the corporates ability to sue the Govt?

Not theirs to sell.
And whereas, it maybe expedient that the Laws Customs and Usages of the Aboriganal or Native Inhabitants of New Zealand, so far as they are not repugnant to the general principles   of  humanity,  should  for  the  present  be maintained  for the government of themselves, in all their Relations  to  and  dealings  with  each  other: and  that Particular Districts should be set apart within which such Laws, Customs, or Usages should be so observed:

Nice quote Scarfie.  But you would have to explain the relevance to the sale issue.  There is in fact no connection.

This sort of thing relates back to article 2 of the treaty, where there is dispute over the meaning between the Maori version and English version. The document I have quoted from, as well as the Declaration of Independence 1835 seem to give better support to the translation Maori prefer. There are more documents about from the time that would give even greater weight, but Maori have been stymied the whole way by dubious legal proceedings. They are however slowly forcing the crown into a corner as their finances allow them to challenge these cases.
If you read further on that site you will see reference to legal proceedings from the late 90's where the crown were asked by the high court to furnish evidence that they had the right to govern. This was never provided. The website has not been updated to reflect on the outcome of that case though.

Usual stuff.  You like the things that support the view you want.  And don't like the things that don't.   No connection to the sales either way.

I like the way you write it off so easily. Trouble was that is what the crown has done for 150+ years and are slowly having those decisions reversed.
That is why it is relevant to the sales. If it turns out Maori do own the rights, then any sales can be reversed down the track.
What is usual about this is the typical uninformed opinion of europeans. I have given you information that might educate you, but it seems you want to stick your head in the sand? The constitutional base for New Zealand is wafer thin and still needs to be resolved, even without treaty. Considering the reliance on property investment in New Zealand I would think people would be more interested in what underwrites that ownership. One court win for Maori could change the ownership of most of the land north of Taupo.

its not news scarfie, most of the world is on wafer thin legal waflle. this is the same in Usa, Canada, Australia etc- where its not is where the nation state just does not care.

Haha quite true. Maori probably have a little more leverage though.
Just reading through Dr Margaret Mutu's (PhD) profile and it is interesting to see her current work involves working out the foundations for a written constitution.

Not convincing Scarfie.  You rely on farfetched legal arguments that have no relevance to water.  And dismiss any legal decision you don't like as 'dubious'.  Doesn't work in the real world.  
As for me --  I love my river with all my heart.   The Nations ordinary processes of protection, imperfect as they are, are what should be used.  That any group claims special status is the biggest threat to the river I can think of.
As for future constitution.  One people.  One government.  No Apartheid.

KH: you can't forget the wording in the second line of what Scarfie has posted - "so long as they are not repugnant to the general principles of humanity".
"And whereas, it maybe expedient that the Laws Customs and Usages of the Aboriganal or Native Inhabitants of New Zealand, so far as they are not repugnant to the general principles   of  humanity,  should  for  the  present  be maintained  for the government of themselves, in all their Relations  to  and  dealings  with  each  other: and  that Particular Districts should be set apart within which such Laws, Customs, or Usages should be so ob served"
Most people would find it repugnant if there was apartheid in NZ. 

KH can stick his head in the sand and pretend that everything is sorted and that Europeans, represented by the crown, can ride over the rights of others in this society forever. The is his perogative but does not represent the real world. These things are happening and I wonder if it would not be better to have these things discussed out in the open, rather than risk a pendulum effect. The justice system has never really been that in New Zealand and is more about who tells the best story on the day. While Maori continue to litigate there is a risk of a win that puts all the chips back in their hands.
As of October 2010, the Nga Puhi's claim that sovereignty was not given up in their signing of the Treaty of Waitangi is being investigated by the Waitangi Tribunal.[5] The Waitangi Tribunal, in Te Paparahi o te Raki inquiry (Wai 1040)[6] is in the process of considering the Māori and Crown understandings of He Whakaputanga o te Rangatiratanga / The Declaration of Independence 1835 and Te Tiriti o Waitangi / the Treaty of Waitangi 1840.
KH probably thinks I am Maori, or at least pro Maori. I hope not, because this would confirm the shallowness in thinking that he has displayed so far.

So Scarfie promotes apartheid by quoting that law.  If I understand you correctly.  You will see beneath he has dropped the specious law quoting and reverted to abuse.   I'm waiting for Scarfie to now repudiate apartheid.  ( well - not waiting actually)

KH - No I'm not saying Scarfie is promoting apartheid at all.
Sovereignty is being challenged and that is what Scarfie has brought to the columns attention.  However if that challenge was to be successful and people were treated differently from now, then wouldn't that be "repugnant to humanity" and thus ensure that equality was still delivered? That is the  "One People, one law, no apartheid" that you mentioned could be still met.
Are you suggesting that those things can only be achieved by the staus-quo?  Do you consider that Maori couldn't deliver a non-apartheid environment? 
There are some very serious issues being discussed and not much debate within NZ that have the potential to affect all our lives whether your Maori, European, Asian etc and it will be decided by those who have the legal jurisdiction on the issues.
I find it very interesting that a Constitution is being written by the Maori as our current Constitution is all about NZ's current Sovereignty. 

If you ask me we would cut the present costly legal nonsense off at the knees if we simply recognised and implemented a Maori right to share in governance by way of a second house.  
Nearly all parliamentary democracies and constitutional republics have two houses anyway (a shared governance model) - so why not disestablish the Maori seats in our current unicameral parliament; establish democratically elected tangata whenua representation (there is presently no democracy in terms of determining who these iwi leaders holding the government to account are .. perhaps one of the main reasons why Maori generally continue to do poorly in relation to most social measures - the present 'system' is elitism/nepotism in its most pure form); establish a second (indigenous) house; resolve all historical griveances with individual iwi; retire (nullify) the Treaty; and hold the lot of our representatives jointly accountable.
The alternative of governance via the judiciary simply gives our current leadership a way out - and those taking the court action have no electoral mandate.

Would Maori be happy with the arrangement you propose? Democracy does not strike me as something compatible with an unselfconcious culture. I like that you are thinking about this though.
Resolving the grievances is going to be a hard pill to swallow for a lot of Europeans. I am working through a book now that outlines how Wellington and the Wairau Valley were "sold" to the crown when in fact the paramount chief(Te Rauparaha) and nephew and also chief Te Rangihaeata were imprisoned in Auckland and were not party to the sale. This is apparently before the Waitangi Tribunal.
What is uplifting about the New Zealand situation is that two cultures that are so different have co-existed fairly well together overall. It would be good to think that a resolution could be reached that would not deviate too far from the status quo. Question is how to bring Maori into the fold without necessarily diminishing the interests of other New Zealanders. I would suggest that the international banking cartel are the biggest current obstacle.

Would Maori be happy with the arrangement you propose?
Hahaha.  Well, "Maori" are not an homogeneous lot - and if someone would produce inequality statistics within Maoridom - it would make the overall NZ Gini coefficient rating look positively outstanding.  Meaning inequality amongst Maori would likely stun everyone.  Most NZers have no idea how elitism/nepotism operates within iwi organisations - and those notable non-elite Maori daren't discuss the issue for fear of intra-racial retribution, I suspect. 
So, my guess in answer to your question is, Maori elite would likely shun democracy at every level, but they are very much the minority.  It would indeed be a very interesting debate.
And, I'm curious - what do you mean by an "unselfconscious" culture?


Now that is an excellent question to ask, I like an inquisitive mind About 30° East is a line that defines east and west. The west are self concious, the east are not. Forgive me if my explanation comes short of the mark, but it is really about how we define ourselves. In the west it is about what we do for a job, how much we earn perhaps, or our achievements(self centred?). In the east people define themselves by how they sit within a group, or by the group. In Maori terms you will find they define themselves to something external, but more likely a land mark. I learnt the distinction in terms of design. The west can invent, or progress design, whereas the east can’t. However the east are very good at refining and perfecting a design better than the west.


In this you will find clues to the differences in treatment of intellectual property, or property in general. One is about individual rights, whereas one is more communal. Do you see the difficulties there? Until this is understood this stick you head in the sand like KH does is a road to nowhere.


If you look at Maslow's heirarchy of needs, they are quite different for the two.


Demand goes up and apparently justifies price increases.  Demand goes down and prices increase.  Mmmmmh.  We see how this works.
A major issue in New Zealand is that we have an incredibly wise, productive and adaptable SME sector.  But ridden into the ground by very inefficient large enterprises.  Who have market power and control.  eg.  $8 billion goes out of the country this year in bank profits.
Compare the price of milk here and in London.
We have large costs with these rorting enterprises. And if our workers were also not ripped off in what they purchase, (building, food, power, telecoms etc) they could live much better on the small incomes they receive.

I don't think you can emphasise enough how Tiwai point could become a pivotal issue for this government.
The smelter has been a potential major issue bubbling under the surface for decades. It had a rocky political and environmental start with the Manapouri project and the huge successful public opposition to raising the level of Lake Te Anau. Several governments have turned down offers by the various smelter owners to buy Manapouri and privatise its supply.
It dominates the Southland economy with 800+ direct jobs and several thousand sub contractors and is the home patch of the Minister of Finance. Its closure would be electorally damaging in the region to any government and Bill English in particular. On the other hand lower electricity prices nationwide would be generally beneficial to govt popularity and could provide economic stimulus for other businesses.
It is a major contributor to our CO2 output regardless of whether or not you believe in man made global warming. The closure of the smelter plus the substitution of Manapouri's very efficient hydro generation for thermal generation would have a huge impact on NZ's CO2 footprint.
Tiwai Point is not state of the art in terms of its efficiency and is currently running at a major loss despite receiving absurdly low power prices not available to other businesses. I don't recall the subsidy per worker this amounted to but it was significant. Its major problem is the falling price of aluminium and new smelting capacity in Asia not the price of power or its labour force.
It dominates electricity consumption in this country to a degree seen in few other countries. The sudden availability of an extra 15% of supply would radically change the dynamics and prices of the entire energy sector IF the government practiced what it preaches and let market forces work. If it agrees to renegotiate the smelters power prices down even further it will be seen as another step on the continuim of folding to corporate pressure over job threats. Can a govt save these jobs but allow others to go overseas because they are not "cost efficient"?
If that 15% becomes available the SOE sales all reset at lower prices and would not be worth the already dubious economic benefit. If power prices to the smelter are subsidised further the govt is seen to be not only propping up a foreign corporate, although for the sake of significant employment, but also of interferring to support the current electricity market and it high prices. It would also be turning down the opportunity to future proof NZ's electricity supply for generations if combined with ongoing energy conservation and efficiency improvements. No new dams or thermal plants needed. Gas could be used for other purposes rather than power extending the life of our gas fields.

Well put, and on top of that Transpower could force prices higher
Big power users say the country could pay hundreds of millions a year more for electricity, if grid company Transpower and other lines companies win legal cases to lift returns on their assets.
That could translate into household power bills rising almost 3 per cent if Transpower gets its way in court in a case starting next month and another 5 per cent if lines companies follow suit, according to Major Electricity Users' Group calculations.
- dare they give the smelter a free pass on this ? 

Sry OMG - repeated your link above after you .

No worries, Stephen, we're both on to it, LOL.

I know what will happen, John Key will do a deal, thats what he does, deals. He has no interest in free markets and competition. Does not really believe in free enterprise, only in making deals, trading, he is a barrow boy made good. Funny that every company he has ever work for no longer exists in any real way BT, Merills LWR, the old accounting firm, all gone one way or another. Nothing really long term going on- jut the next deal.

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Days to the General Election: 39
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