Wednesday, December 09, 2009

Anti-environmentalist spite

Energy Minister Gerry Brownlee has announced a reform of the electricity sector, forcing asset swaps between state-owned generators to enhance competition and abolishing the Electricty Commission. Rather than being "sweeping" or the "transformation" it is being sold as, a lot of the changes - e.g. forcing retailers to hedge and requiring them to compensate customers if they run a dry-year conservation campaign - are simply minor tinkering. But the asset swaps are big news. And the biggest consequence of them is to utterly destroy Meridian Energy's brand as a 100% renewable generator.

That brand is worth money. Tens of thousands of people (including myself) have switched to Meridian in the last few years because we want to give our money to a company which generates solely from renewable sources such as wind and hydro, rather than unsustainable and polluting gas or coal. The government has just overridden that decision, shafting both Meridian and its environmentally-sensitive customers, by forcing Meridian to trade two South Island hydro stations for oil-fuelled Whirinaki, the most polluting and inefficient power station in the country. It hardly ever runs - it is a backup generator - so its hard to see how owning it will improve Meridian's ability to supply power and hence compete in the North Island. But merely owning it is enough to make Meridian's renewable brand untenable - meaning a loss of value for the company (not least because the millions of dollars they've spent building that brand in the last few years will have been wasted).

(Yes, I know the electrons all come out of the same pipe, and that I don't get special renewable electrons where other people get dirty coal ones. But giving my money to Meridian means I am altering the profitability of renewable vs non-renewable assets, and encouraging investment in the former. Why does the government not want me to do this?)

If you've made the choice to switch to Meridian for environmental reasons, this is worth raising at the Select Committee stage. We've made a positive consumer choice to benefit the planet. And the government is over-riding it for no apparent purpose. The decision looks like simple spite from an anti-environment government which wants to deny consumer choice.