It looks like another backdown

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The Prime Minister yesterday seemed to foreshadow a pulling back by the Electricity Authority from its controversial new charging proposals for the transmission network.

This is yet another move to remove any politically controversial issues as the Government moves into election year next year.

Simply, the proposals would see industries and people in the north pay more while those in the south paid less.

It has already become a political issue with NZ First attacking the proposals which would hit Winston Peters’ Northland electorate hard.

And the Auckland Employers and Manufacturers’ Association is heading a high-powered business and power company lobby group opposed to the proposals.

Key recognised the politics of the situation yesterday when he said that those who will do well out of the proposals would be fairly quiet while those who didn’t do so well would voice their case.

But then he appeared to play down the possibility of the charges actually going ahead as proposed.

“I think there’s a lot of water to flow under the bridge before these charges actually happen,” he said.

And he suggested that the Electricity Authority, the independent body which has proposed them, may itself take some action.

“The Electricity Authority may well come back and have another look at the matter.

“And as we know it’s a fairly litigious area where it is likely whatever decision they make will be challenged in court.

“My view is that nothing is going to happen quickly.”

The charges are not proposed to come into effect until 2019 anyway so if that date is pushed out further then the likelihood of this becoming a burning political issue during next year’s election seems remote.

North Island industry is warning that if the charges were implemented, then jobs could be lost.

Norske Skog, who own the Kawerau pulp and paper mill say they have limited ability to pass on any increase in charges to its end consumers due to competitive pressures in their international markets and therefore must bear the brunt of charges as an impact on profit.

NZ Steel says the proposed charges could be another reason why its business could become untenable.

The company’s general manager John Nowlan says, the company could face an extra $12.1 million in costs annually.

"The Electricity Authority's TPM [Transmission Pricing Methodology] guidelines would increase transmission prices to NZ Steel by up to 300 percent with no additional value or benefit, no ability to recover costs, and no options to mitigate usage," says Nowlan.

"NZ Steel is facing a number of regulatory, policy and system changes that could make the steel-making part of our business untenable."

And the Kaitaia timber mill owned by Juken NZ faces much smaller cost increases under the proposed changes – believed to be less than $2 million a year – but enough, say sources in the town for it to threaten closure if the charges went ahead.

The Government with its move last week to take another look at the local government changes and now Key’s hints on the electricity charges is clearly trying to get any controversial legislative or economic changes off the table as it heads into election year.

 

 

 

 

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