Bradford sceptical of ECNZ predictionsEnergy
Energy Minister Max Bradford rejects claims that the Government would lose as much as $3.2 billion in value from splitting ECNZ, but said the Government was prepared to take a hit on the books in the national interest of cheaper power for consumers.
"We are doing that in order to get proper competition, remove monopoly behaviour in the market place and get lower, competitive power prices for the benefit of consumers - especially household consumers - and the economy."
"Further break-up will mean generators will not be able to hold prices up above those which would prevail in a competitive market " Mr Bradford said.
Mr Bradford accepted the Government would lose some book value, but said it was appropriate to be sceptical of ECNZ's projections. It was important to remember that ECNZ had a vested interest in opposing an immediate break up of their company.
"ECNZ has a record of projections which suit its corporate purposes. Only 18 months ago it was arguing that prices needed to rise by more than 20 per cent or no one would build new power stations. This has simply proven to be incorrect."
Mr Bradford said he was pleased ECNZ endorsed the view that reform at the retail end of the industry was part and parcel of making the electricity sector fully competitive.
"The Government is determined to ensure that power price reductions from generation break-up are passed on to consumers. That is why it is looking at a package of electricity industry reform including reform at the retail/distribution end at the same time as generation," Mr Bradford said.
The value losses ECNZ predict from split up appeared to be based on a series of worst case assumptions. Officials were working through the myriad of assumption behind ECNZ's prediction to test their robustness, Mr Bradford said.