Wednesday, March 31, 2004

What more can I say?

No Right Turn has an intriguing post on energy policy in the wake of Project Aqua's demise. He's right to say that we've got plenty of electricity generation coming on stream to deal with demand in the short term, and what's more, he's got the figures to prove it. Unfortunately, the medium term will be problematic.

Part of the problem is that for years New Zealand relied on cheap generation, most latterly from the Maui gas field which accounted for most of this country's gas supply. As long as the cheap gas kept flowing, alternative generation didn't stand a chance. No Right Turn points out that this was one of the fundamental problems with Project Aqua; diverting most of a river promised cheap electricity and priced the alternatives out of the market.
Cheap electricity leads to wasteful consumption, a lack of emphasis on conservation and lacklustre development of environmentally sustainable generation alternatives.


I remember seeing some graffitti that read: 'can you afford free love?' It's almost the same thing here. What is the cost of cheap electricity? Despite the deregulation of electricity markets and a gradual rise in prices, New Zealanders still pay less for electricity than most other developed countries. In 2000, for example, New Zealand's average household price of electricity was U.S.$ 0.060 in comaparison with an OECD average of 0.105.

Perhaps as a result, we use more electricity in relation to GDP than most other countries in the OECD. That's a whole bunch of opportunity cost. Look at it this way: we pay less for electricity per kilowatt hour, but we use more of it in relation to our economic output than most other countries in the OECD. Not too innovative, if you ask me.

The bottom line? Well heck, where is the bottom line? Cheap electricity leads to wasteful consumption, a lack of emphasis on conservation and lacklustre development of environmentally sustainable generation alternatives.

Say, maybe the Resource Management Act is doing its job after all!