Anders Crofoot says households and businesses would be worse off under the Labour-Green robbing-Peter-to-pay-Paul electricity policy

Anders Crofoot says households and businesses would be worse off under the Labour-Green robbing-Peter-to-pay-Paul electricity policy

Content supplied by Federated Farmers

Federated Farmers is concerned politics may be behind the Labour/Green policy on electricity and that its implications have not been fully considered. 

“Last week, Parliament displayed some of its best qualities but it seems regular service has resumed,” says Anders Crofoot, Federated Farmers Energy spokesperson. 

“Whatever the motivation, there is suspicion this policy may be a tactical response to the Government’s asset sales programme.  Cynics may say that at the last election it was milk but at the next it will be the power bill."

“Federated Farmers feels uneasy about this because electricity is a major farm expense. The Ministry for Primary Industries estimates the annual electricity spend by arable and dairy farmers is both around $25,000 each year, for sheep and beef farmers, it is around $6,000."

“Excluding the Emissions Trading Scheme (ETS), StatisticsNZ data seems to indicate that the rate of power price increases has slowed in recent years. Certainly, they have been eclipsed by run-away price increases in the less productive non-tradable sector, with near triple digit council rate increases since 1998."

“But to us, the idea of a Pharmac styled single power purchaser does not add up."

“Pharmac purchases medical products from the global market whereas the proposed buying agency is limited to local power generators. Unlike with pharmaceuticals, there is no such thing as ‘generics’ when it comes to electricity. Nor can we do what happens overseas and ‘import’ power from other countries."

“The fact for low volume electricity users is this; the line charge now makes up a significant percentage of the final bill and there are no alternatives being proposed for that."

“If this policy eventuates power prices may go down on one hand, but due to current Labour/Green policies on the ETS, the other hand takes it back and more. We believe households and businesses would be worse off under a robbing-Peter-to-pay-Paul policy mix."

“Controlled pricing does not produce innovation or encourage private electricity schemes either. There is also the high risk of stopping new operational innovations; any innovation which could increase profit margins is likely to be grabbed off companies by the buying agency."

“You also risk perverse outcomes like cheaper to build and run thermal stations passing on their large ETS costs to consumers and businesses. Even if the electricity was somehow cheaper, with lines and ETS charges added on, would the consumer come out ahead?” Mr Crofoot concluded by asking.

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?

We welcome your comments below. If you are not already registered, please register to comment.

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.

6 Comments

Comment Filter

Highlight new comments in the last hr(s).

With respect, the power cost figures can be much higher for well/bore irrigation.

Rather than playing the reds under the bed card we would prefer ff using their analyst to come up with possible power market rules that do not favour generators.

Also (given the regular use of milking equip) proposing how a milkers/irrigators co-op could buy wholesale power on behalf members. Would be much more constructive conversation starter..

Here are power costs. Shed and farm say $50k to $55k. Irrigation $25 to $30k. Not deep bore. 800 milked.

Crofoot saysBut to us, the idea of a single-desk power purchaser does not add up"
 
Whoa .. hang about .. isnt Fonterra a product of single-desk thinking .. I think it is .. re-writing history by the lobbyists ..
 

Does Anders have anything useful to say in this press release.  Can't find it.  I would  have thought Fed Farmers would have been overjoyed at the end of the protected industry and super profits.  Farmers have been rorted on electricity price more than most. Maybe a few members could give Anders a wee chat about who he should be speaking for.

“I well know that there are politicians who will crawl over cut glass to get to power,”
http://www.nbr.co.nz/article/use-kiwisaver-buy-back-contact-mighty-river-peters-ck-138977
Gosh are there...I can't think who Winston is on about!

Roughly:
Cost of per Kwh for Industrial users:     15 cents
Cost of per Kwh for residential users:    30 cents
 
Difference: 50%
 
Why?