GENESIS WARNS OF REGULATORY CREEP
21 November 2008State-owned power operator Genesis Energy is on a charm offensive, warning business audiences of the dangers of regulatory creep in the electricity and related markets.
Genesis wants the incoming government to leave the electricity market arrangements alone.
“We can have a centralised model or a decentralised model. At the moment we have a bit of both. My worry is that if we change toward more regulation, we will get the benefits of neither approach but the costs of both,” corporate affairs director Malcolm Alexander said.
He told a Wellington business audience the fundamentals of the electricity market were sound, that it dispatched electricity effectively and gave good price stability.
“It ain’t broke,” he said.
What he called “inappropriate fettering” of the players in the electricity market would lead to higher prices, less security of supply and would deter further investment.
He also argued Genesis’ long held position that there should be a common regulatory framework and a common regulator for all the energy and infrastructure industries covering electricity, gas and telecommunications.
“Putting the Electricity Commission and the Gas Industry Council into the Commerce Commission would reduce ad hoc decision-making and give greater consistency in decisions.”
A recent media report suggesting the government should look at merging the three electricity companies it owns –Genesis, Meridian and Mighty River Power –o form one entity has been sourced to Genesis.
Why this scenario should be raised is not clear, as it has no obvious support from the incoming government.
Asked about this, Mr Alexander responded that Genesis feared “regulatory creep over the long term.”
He said there was a danger the market would be blamed for not delivering what it couldn’ deliver, given transmission constraints between the North and South Islands.
National Business Review
(c) 2008 The National Business Review
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