Power rules rejig takes flak

By Mark Reynolds

The Government's constant rejig of electricity laws is damaging investment in the industry, United Networks chief executive Don Bacon said on Friday.

Continual change made it impossible for organisations to make long-term investment decisions, and that was not healthy for an industry that should be constantly reinvesting in new equipment to ensure security of supply to consumers, Mr Bacon told attendees at the annual Electricity Engineer's Association conference.

Upheaval in the energy sector had been going on for 18 months, and for transmission companies there was at least a further six months of uncertainty as new regulations to impose price control were cobbled together, Mr Bacon said.

Mr Bacon said the continual change was due to political expediency replacing commonsense.

He suggested the industry and Government should work together to redesign a regulatory regime that both satisfied concerns about potential abuse of monopoly electricity assets and allowed companies like United Networks to make a satisfactory return on their investments.

"What we have seen is regulations that have been rushed through and are muddled," he said.

"It is my view that the light-handed regulatory regime we have has produced some pretty good results with New Zealand electricity prices being about the lowest in the world.

"If the sytem has to change then at least let's design something that does not unfairly saddle all companies with increased costs and constraints," he said.

Mr Bacon said he believed one of the main goals of the reforms was to bring economies of scale to the electricity transmission business. But the delays and alterations in legislation were actually delaying any further rationalisation of companies, because asset prices could not be agreed on until the laws were settled.