Friday, May 22, 2009

Bradford's Folly

As the recession bites around the world there are off-the-cuff bailouts of institutions and industries. The global free-for-all is over [for a while?]. The trouble is once the family silver is sold it is hard – and certainly expensive – to buy back.

Illustrative is our electricity. There is a big fuss at present about the profits the four major suppliers are making, overcharging by $4.3 billion in the last six years the Commerce Commission says. Three of those suppliers are state owned. Certainly I am well aware how the cost of electricity has far exceeded other increases. For those on fixed incomes it has become a real burden.

The worst two things that the Bolger/Shipley government did were Ruth Richardson’s ‘mother-of-all budget’ which slashed social spending and Max Bradford’s market model electricity change. Labour bewailed that model but basically did little to modify it.

When I was younger the construction of dams for hydro-electric power was a wonder of the modern world. On my first visit to the North Island I visited friends at Tuai which used water from Waikaremoana. When I lived in Hamilton there were week-end drives to look at the latest dam being built on the Waikato river. I’ve picnicked at Matahina dam near Edgecumbe and near the intake at Lake Coleridge. Benmore in the South Island was hailed as state of the art.

But power generation from this source became controversial. The tunnels which carry water from Lake Manapouri to Doubtless Sound are an engineering triumph. But the raising of the lake level proved controversial while the construction of the Clyde dam was even more so. Muldoon only rammed it home with the support of Social Credit.

Everyone wants power. This blog assumes it. My two machines that thump away my nights depend upon it. As does my life. On this chill day our heat-pump is necessary. Dam-building is now difficult. (Water-power is also dependent upon climate). Wind-farms are common in Denmark and North Germany, but here no one wants them in their own back-yard. Coal-generation, environmentally unfriendly. Nuclear power – a no-no in New Zealand.

So we have a problem, a democratic problem. The market model apparently positions the government of the day to one remove from the responsibility for both supply and cost. But when things go wrong the buck comes back. Joe and Jane Public want action.

Before Bradford the responsibility was in the government’s court. The whole country’s grid was controlled from a Waikato centre, which monitored demand, flucuations and weather patterns and ensured continuity by juggling hydro- and coal-based stations and the flow of power across Cook Strait.

My concern is that in an attempt to wrestle with the issue the Key government might further break up the state-owned retailer/generators. The Auckland black-out should have been a wake-up call that the State cannot afford to let electricity supply be the responsibility of the market alone.

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