Monday, 20 July 2020

Free Press, 20 July 2020


In Your Letterbox

The Electoral Commission’s purple flyer on the End of Life Choice Act should be in your letterbox. We know the legislation inside out and we want to tell you it is good, accurate information. However, there is going to be a lot of misinformation to correct. Besides the Electoral Commission’s flyer, we highly recommend supporting Yes For Compassion. They are the ‘yes’ campaign for this referendum and they need your support to counter the anti-choice brigade. Please sign up and be counted with them here.

Saving Tiwai The Free Market Way

Sometimes the issues of the day can benefit from a little history. Free Press has family history going back to the smelter’s construction. Why was it built in Southland? Because Lake Manapouri always had the potential to provide a huge amount of electricity that would be hard to transmit north.

Blame Muldoon

Like so many problems, Muldoon is partly responsible. The deal was that Tiwai Point would get electricity at cost-plus from Manapouri. Muldoon was a cynical bully. Tiwai made a profit so he took it, reneging on the deal and ramping up the electricity price for Tiwai. The reputation of the whole country in the eyes of foreign investors suffered.

And Now

The problem Muldoon started still exists under current laws. Tiwai cannot take advantage of the basic physics that made it a good idea in the first place: it’s close to a really big generator that’s not close to much else. It pays around $65 million per year for transmission just to get electricity from Manapouri to Tiwai Point. They would pay the same if they built it in Kaitaia. The weather is better but transmitting that much power 1500 kilometres is nuts. The current rules mean prices don’t reflect physical reality.

The Proof

Manapouri is not connected to the national grid, at least not well enough to supply the rest of the country. If Tiwai closes, new lines will have to be built to transmit power north instead. This will cost a fortune and surplus electricity from Manapouri will have to be dumped while it’s built. Note that a new line will have to be built if Tiwai shuts.

But, But, But No. 1

There exists in the Electricity Code a special provision called ‘prudent discount.’ If a customer can realistically get cheaper transmission pricing than using Transpower’s network, Transpower should give them a ‘prudent discount.’ The idea is to stop them doing something stupid such as moving offshore or building their own generator or transmission line. In theory, at least, NZ Aluminium Smelters could build their own line from Manapouri to Tiwai, invoking the prudent discount rule.

But, But, But No. 2

This is New Zealand in 2020. Build a transmission line through the Southern Alps across conservation land? We have the RMA. We’re grateful when the local council lets us build a deck. So an alternative is not viable and the prudent discount can’t be invoked. Tiwai is closing because of transmission costs. Transmission costs are high because of the RMA and the general opposition to building near absolutely anything in New Zealand.

What’s The Solution?

The Government is legislating all sorts of crazy projects at the moment. If it was to do one thing, it should be this. Legislate that a transmission line is consented between Manapouri and Tiwai. They are not going to build it. Transpower will have to give them a discount on transmission. Ironically, legislating a line to be built means one won’t be built, but failing to do so means a new line will be built to take power north. We suspect this manoeuvre will make the smelter viable, the way it was originally planned. If it doesn’t, maybe they really should close?

Intervening With A Clear Conscience

This is an intervention, but it is one free marketeers can support with a clear conscience. We are simply returning a modicum of sanity, as if we are a country where it is possible to build without the RMA. It is good for reducing carbon emissions, because Tiwai uses hydroelectricity and is low emission compared with coal powered smelters in China, for example. It is good for jobs. It is good for the New Zealand economy. The next government must legislate a transmission line from Manapouri to Tiwai.

Why We Need ACT

ACT is the party of consistent, constructive and principled thinking. So many people are turning to ACT because of our approach to making New Zealand better through better public policy. If ACT sounds like your voice, please consider joining, volunteering, or donating (or all three) to support ACT this election.