Wednesday, May 26, 2004

The market bites us in the arse again

Electricity companies are now talking of power shortages and brownouts in parts of the South Island this winter - not because of any lack of supply, but because the national grid can't cope with the load. Why not? Because Transpower (which, as an SOE, must operate under commercial imperitives) hasn't thought that there's been enough profit in it for them to upgrade the lines. In other words, we've been bitten in the arse by the market - again.

Why do we continue to tolerate this? We knew from TransRail that running a big piece of infrastructure according to free-market values meant running it into the ground. The national grid is simply too important to allow that to happen. If Transpower cannot properly plan and invest in infrastructure as an SOE governed by the free market, then we need to either bring it back under full crown control or turn it into a crown entity. Either way, it must have a charter which clearly spells out that its sole reason for existence is to provide, support and run a national grid which meets our electricity needs. If we fail to do that, if we continue to make important infrastructure decisions by short-term NPV analysis, then we're all going to be left in the dark.