The RMA and energy supply

Aaron Bhatnagar responds to today's scare-story in the Press about the firing-up of the Whirinaki backup station to cover a temporary spike in electricity prices with a kneejerk call for us to

get serious about energy generation and ask our legislators to make it easier for power companies to build power stations

In other words, gut the RMA. But the problem isn't legislative barriers to new construction; it is (or rather, was) the market. It takes time to build a power station, and the current supply is dictated by decisions made five or so years ago. And five years ago, the electricity market actively discouraged new construction. Generators could make windfall profits from the spot market during a shortage, and any new generation or security of supply was seen as diluting this. Thus, not much got built.

Since then, the government has reformed the market - most notably by having a backup station which will kick in whenever the price gets too high - and this has provided a stable environment in which the right investment decisions are being made. New power stations are being built - almost 600 MW in the next two years off the top of my head - and more are currently in the consents process. But it will take a while for the new generation to come on-stream, and in the meantime we run the risk of a shortage if the southern hydro-lakes don't fill on time. There is little policy-makers can do about this; all we can do is wait and see.

But what about the future? The fact is that we are more than meeting our expected demand growth under the current arrangements. Gutting the RMA to encourage more projects is thus unnecessary; all it will do is supplant current environmentally sustainable projects with environmentally unsustainable ones. Business may get cheaper electricity, but they will get it by dumping the environmental costs on the rest of us. And I don't see any reason at all why we should let them do that.