Heffernan says Labour’s power policy is nationalisation

The Herald reports:

Doug Heffernan is not a fan of what Labour and the Greens plan to do to the electricity sector.

Dr Heffernan retired last Friday as chief executive of Mighty River Power after nearly 40 years in the industry, during which he witnessed radical structural changes.

He worked for the New Zealand Electricity Department and its corporatised successor, ECNZ. He was chief executive of Power New Zealand, before the local power companies were split into lines and retail energy businesses.

And he had been chief executive of Mighty River Power since it was carved out of ECNZ as a state-owned enterprise and latterly as a listed company under the mixed-ownership model. …

Under the NZED central planning model, nearly every generation investment decision was a bad one, he said, citing Marsden B (built to run on oil but which never generated a single kilowatt hour), the Clyde Dam with its massive over-runs and Huntly, designed to run on coal but which spent most of its life gas-fired.

“I’m old enough to remember the shortages in the 1970s because someone made the wrong decision about what plant to run. Same thing happened in 1992. We actually ran out of electricity,” he said.

California also has a single buyer model and they are warning they may need blackouts.

“That is what has surprised me over my career. To go from a position where you think the smartest brains would work out the best thing to do, to a system where a diversity of thinking has created far better outcomes.”

Dr Heffernan sees the single-buyer model as a form of nationalisation. “They say, yes, it is someone else’s capital but we will control the outcomes. That’s equivalent of having nationalised the industry.”

Of their many bad policies, this is arguably the worst. Even the man they cite as the inspiration for the policy, Frank Wolak, has lashed it as being a very bad move.