Labour and Greens propose a state monopoly for power purchasing

Kate Chapman reports:

Labour is promising to cut the average Kiwi power bill by up to $330 a year if elected to government next year.

It plans to do so by setting up a single buyer, NZ Power, to purchase all electricity generation at a fair price.

Announcing the plan today, leader David Shearer said it would create 5000 jobs.

The Crown would forgo dividends and tax revenue from the power companies at a cost of $60-$90 million a year.

“I’m not prepared to sit back while power companies cream super-profits at the expense of households and the economy,” Shearer said.

As a single wholesale buyer NZ Power will set electricity prices ensuring power companies get a fair prices but not super profits.

The sums here look as dodgy as with Kiwibuild. A cost of $90 million a year is meant to translate into $330 for 2 million households? That’s a 500% difference.

Secondly the history of NZ is that state monopolies do the worse for consumers and prices.

I await the policy to make it illegal to sell houses, except through the state. I mean houses are just as essential as electricity.

What this effectively means is that politicians will set the price of electricity. Remember when Muldoon decided what the interest rates will be? And the Government decided what rents you could charge, and price and wage freeze? All decided by politicians.

A monopoly crown buyer of all electricity will get to unilaterally set the price of electricity and MPs will decide who sits on it and effectively tell them what price they want electricity to be at.

UPDATE: Readers should be aware that this policy is a de facto nationalisation of the privately owned Todd Energy and Contact Energy. it is almost a confiscation without compensation of their assets. Because Labour and Greens are saying we will pass a law to make it illegal for you to sell power to anyone except the Government, and only at the price we unilaterally set.

Think about that, and the precedent it is setting.

This is a policy out of the 1970s and some sort of socialist nirvana state.

Imagine you set up a business, and one day the Government came along and said we are going to make it illegal for you to sell your product or service any more – to anyone but us. And you get no say in what the price will be – we will unilaterally determine that.

This is akin to theft from the shareholders (and if you are in KiwiSaver you are probably an indirect shareholder) of Todd Energy and Contact Energy.