Government's Clayton Electricity Market Disastrous for Consumers
A 'Clayton's Market' was Federated Farmers of New Zealand (Inc) Vice-President Charlie Pedersen's response to the
Government's announcements of further meddling in the electricity market.
"Consumers will be the big losers from the Government's intervention and control of the electricity market," said Mr
Pedersen.
"Given New Zealand's reliance on hydro generation, it is inevitable that there will be significant increases in the spot
price of electricity during dry years. This does not justify the Government requiring generators to have generation
capacity lying idle for 59 years out of 60 years just in case. Generators will have no option but to pass these costs on
to consumers in the form of higher electricity costs.
"The Government has stated that securing spare capacity could increase the average price of electricity by around half a
cent per unit. Given that the average wholesale price was 4.7 cents for the 2002 year, this equates to an increase in
power prices of around 10%.
"The unbridled powers the Government proposes for the Electricity Commission will send shivers up the spine of anyone
contemplating investment in the electricity industry. Instead of focusing on removing the blockages for generators
investing in further capacity, such as constraints under the Resource Management Act (RMA), the Government has added
another hurdle.
"Government intervention nearly destroyed the nation in the early 1980's. Is this Government intent on repeating the
mistakes of the past."