Sunday, May 14, 2006

Major reformation of NZ energy complex to be announced in Budget.PT1

New Zealand has been undertaking a major review of its energy complex as part of its requirements as memebrship of the IEA.

The IEA in its 5 year review of energy policies for participant governments undertakes a broad based review and provides conclusions and outcomes with Government participation under Chatham House rules.The suggested outcomes can be taken as a foregone conclusion.

As most international organisations there is factional discourse between the various economic schools and the deregulatory framework,and even the technical analysis of engineering outcomes.

A large proportion of the recommendations are in financial instruments,international treaty obligations and the constraints observed by the Government Control of the electricity commissioner.

Whilst NZ was held as the model of a lassiz faire deregulated market the inefficiencies by the geography,government regulation,the vertical intergration of government energy oligarchies were seen as a discensetive for energy efficiencies.

Overseas the NZ model whilst an example promoted by the Harvard school as an example,it is used as an example of what NOT to do by Canadian and european schools of energy anaylisis.

Figuratively speaking, and in an historical sense, the writing is on the wall in block letters so large that they cannot possibly be avoided or misinterpreted. For instance, the exchange trading of financial assets (e.g. stocks, bonds, and derivatives like futures and options) makes all the objective sense in the world, while most attempts to duplicate on a large scale the successes of these items with electricity and gas have been unsuccessful. In addition, they are largely without any engineering or economic justification. Indeed the post RMA regulatory framework has provided the inverse relationship beween suppliers and consumers that has effectively licensed the existing providers to print money at the cost of the consumer.

For example, in the study and remarks about electricity deregulation in Canada’s largest province (Ontario), makes it clear that buyers of electricity have been treated in a completely unprincipled fashion. Similarly, in a long review of deregulation failure in Ontario, Treblicock and Hrab (2005) suggest that workable reform requires a government capable of effectively communicating to citizens the arguments for reform. This sounds wonderful, but unfortunately it is not easy to do,examining deregulation failure in the US), effective communication seems to be a function of the ability of elected or appointed officials to confect and spread untruths and/or obfuscation – with, of course, the precious assistance of hired-hands from academia.

What that establishment is basically involved in is bleeding consumers via the mechanism of short-run marginal cost pricing, which means that some of the most inexpensive electricity in the world, costwise, is frequently sold at the price of some of the most expensive in Europe .

No where has the deregulation of conduits and generation supply complexes and the introduction of financial instuments to provide consistency of supply as a smoothing mechanism worked to lower prices.The deregulatory framework ALWAYS limits due to pseudo.technical regulatory constraints always provides protrction to the existing players,thus the price constraints of limitation are circumvented as the existing players always realise BEST PRICE for their products.

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