Roughan says investors should thank Greens and Labour

John Roughan writes in NZ Herald:

Investors in Mighty River Power should send the champagne next wnment!eek to Russel Norman, Green Party, Parliament Buildings, Wellington.

The stock looked a good buy even before he talked the Labour Party into threatening price control on electricity. It looks an even better one now.

Yep I reckon they saved me $600 or so.

Brokers and fund managers expect the bids from institutions to be at the bottom or even below the range the Government considers fair value. Taxpayers should send the Greens’ financial larrikin something else – a bill.

Brian Gaynor has estimated the likely cost to the public purse at $400 million.

And that’s just what they managed in opposition. Think what they can do in Government!

Shearer is a sensible man. To enact Norman’s scheme or Labour’s version of it, he would need to ignore all the economic advice available to him.

Electricity is the prime fuel of every modern economy. It is hard to think of a more important price.

The elaborate market that established a price every 30 minutes at numerous different points on the grid might not be perfect – none are – but it is bound to be better at matching supply and demand than a panel of public servants in Wellington.

That is they key point. California with its rolling black outs is an example of what happens when supply and demand get out of sync.

Incredibly – and I mean that – this omniscient agency would pay generating companies different prices based on what it reckoned their costs of production to be. That would leave the companies no reason to contain their costs and every reason to increase them.

Having the Government set the price of power will not lead to it being cheaper, just more expensive in the long run. And that’s not just my view – but the view of Labour’s David Parker when he was Minister of Energy!