Left staying mum on power plans

Doug Heffernan says the uncertainty on the future of the electricity sector is not helpful. Photo / Greg Bowker

Labour-Greens want to wait until after elections before they reveal more about their electricity restructure.

Investors wanting more certainty around Labour-Greens policy for overhauling the electricity sector before the election appear to be out of luck.

The parties released plans for radically restructuring the industry shortly before the float of Mighty River Power in May last year and their policy has hung over the partial privatisation programme since.

At an energy industry conference yesterday the architects of the policy, Labour finance spokesman David Parker and Greens co-leader Russel Norman, restated the broad principles of the NZ Power plans.

"We don't plan to release much further detail before the election," said Norman after a panel discussion at the Downstream conference in Auckland.

"We've released a lot more detail than the National Party did before the Bradford reforms."

In government the parties would be in a much better position to develop policy using the bureaucracy at their disposal, Norman said.

Uncertainty over Rio Tinto pulling out of the Tiwai Pt aluminium smelter and flat demand across the market had also soured the outlook for generators.

Mighty River's share price tumbling soon after listing and weak demand for Meridian Energy later last year meant the Government raised less than forecast. Genesis Energy will hit the market next month and is also seen as a hard sell.

Tauranga's Energy Consumer Trust, a third owner of TrustPower, said that since the policy announcement $100 million had been stripped from its stake in the power company.

But Norman played down the impact of the Labour-Greens announcement.

"Our policy was announced before the [Mighty River] IPO so any allegation that we're responsible for it is untrue.The Government spent a lot of money advertising and telling them it was a great investment," said Norman. "Based on the share price so far that certainly hasn't turned out to be true."

Mighty River Power chief executive Doug Heffernan - who lined up in a panel debate with former Labour Energy Minister David Butcher against Norman and Parker - said he understood why there was not much NZ Power detail but uncertainty was not helpful.

"That's the problem with politics. Politics and commerce don't intersect very well at all," Heffernan said.

Hopes that investors would put money into utilities rather than speculating on property had not been realised.

"A lot of small shareholders were scared away. It's definitely been a bad experience of investors post the IPO," Heffernan said.

The Labour-Greens plan is based on the Pharmac buying model, using a single buyer for electricity which the parties say will result in cheaper power for consumers.

Parker, who was Energy Minister in the last Labour Government, said he remained fundamentally opposed to the asset sell-off.

"We don't like to see the benefits of low-cost generation effectively powered by public water being privatised."

He also attacked research released by the Electricity Authority since the policy launch.

"They were trying to construct an argument against our model rather than be the independent regulator they ought to be. I thought the attack on our policy was crap."

Share Drop
$2.50: issue price for Mighty River Power
$2.065: Closing price yesterday