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Electricity Supply

Entry 177, on 2005-05-30 at 14:31:08 (Rating 2, News)

New Zealand seems to be heading towards a crisis with electricity supply. Traditionally, we have had plenty of capacity through the extensive hydro network supplemented by gas and smaller amounts of oil and coal. Nuclear power is not really an option in nuclear-free New Zealand.

Now the number of obvious locations for hydro stations is reduced, and the gas supplies are running out. Its time for creative measures, such as wind power and use of solar energy.

Before the previous government left power their final act of destruction was to create a competitive business model for the country's electricity supply. Generators, line companies, and retailers would work in a competitive environment to ensure an efficient and reasonably priced supply. Well, it clearly doesn't work. Supplies are running low, capacity is wasted, and prices are increasing alarmingly.

Now the electricity industry is issuing dire warnings concerning a proposal from the Green Party to help supply solar water heating to New Zealand households by buying the units in bulk and selling them at a reasonable cost, along with subsidised loans. It seems totally reasonable, but the according to the existing suppliers it will destabilise the industry and lead to increased prices.

Increased prices when demand is reduced - how does that work? Clearly the industry is primarily interested in protecting their current advantages where they can make huge profit for doing next to nothing. Its yet another example where a business model fails miserably. When the electricity system was controlled by the government we seemed to be much better off - but that didn't fit with the political ideology of the time, of course!

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