Tuesday, June 13, 2006

World hears of NZ's third world power shambles

The shabby little secret of our shabby infrastructure has gone worldwide to potential tourists and investors. I'll risk being labelled "unpatriotic" for pointing out these reports from offshore:

NZealand shares close lower in thin trade dampened by Auckland power outage
Forbes
Power restored in Auckland
People's Daily Online, China
Huge power cut in NZ's Auckland
BBC News
New Zealand's Auckland Has Power Cuts After Storms (Update1)
Bloomberg
Storms black out NZ's biggest city
The Age, Melbourne
New Zealand storm gives new meaning to all black
Sydney Morning Herald
Storms black out New Zealand's biggest city
Times of India
Power blackout causes chaos in NZ's capital
Independent Online, South Africa
Storms black out New Zealand's biggest city (Roundup)
Monsters and Critics.com, UK
Storms black out Auckland
Bangkok Post, Thailand
Gale winds cut power to New Zealand's biggest northern city...
San Diego Tribune (AP)

That last story from the American Associated Press is perhaps indicative of all of the international stories on this. It begins: "Gale force winds battering northern New Zealand cut power to the nation's biggest city on Monday..." But that's not true, is it? It wasn't "gale force winds" that blacked out Auckland, was it -- after all, the continental USA knows what "gale force winds" look like, compared to which these were just light breezes. It wasn't high wind, it was sheer bloody incompeteence caused by the politicisation of the power supply.

It happened before, and it won't change until the politicisation of infrastructure changes.

UPDATE: For those who've pointed out that California has had its own power problems, Allow me to point out that California's power industry is not exactly a free market nirvana either, as both George Reisman and Scott Sutton have pointed out. The title of Resiman's article gives teh flavour: 'California Screaming, Under Government Blows.'

And an excellent article in The Free Radical by one Scott Wilson, 'Power for the People?' pointed out that much the same applies to New Zealand's electricity reforms undertaken by Max Backward -- as it's becoming increasingly topical, we might try to get that article back online shortly. It begins:
Now, let’s get something perfectly clear from the off: electricity in New Zealand has NOT been privatised. Got that? Sure, bits of it have been, but a large proportion has been effectively nationalised by stealth. To understand this, one needs to trace the history of electricity reform in the past 15 years...
And concludes:
Privatisation? Not here! Sure, where the vast majority of generators were once in either local government or local trust hands around one third of electricity generation is now in private hands - these include Contact and a number of small generators. But the vast bulk of power generation, over 60%, is now in the hands of central government.

And while a majority of local lines companies are council or community trust-owned, the national grid is still owned by the state.

So does it all work?
Does it? What do you think?

TAGS: Energy, New_Zealand, Politics-NZ

Labels: , , ,

14 Comments:

Blogger noizy said...

if power cuts are an indication of a "third world" shambles, then doesn't California fall into that category as well?

6/13/2006 09:59:00 am  
Blogger Berend de Boer said...

Stop the presses, the AP gets it wrong!!

You can safely skip anyting that comes from the AP in my opinion.

But 3rd world? There have been more countries with hour long power cuts. I mean, I haven't lived in NZ all my life, so I have some perspective.

But what is at fault is that we have no backup plans at all, not with electricity, not with roads, not with a madman in a plane.

This country has a 3rd world instinct, that's what wrong with it. It doesn't want to be the best, and the few that want to get no traction due to all the lefties.

6/13/2006 10:12:00 am  
Blogger Berend de Boer said...

James, California has one similarity with NZ and that is that the left is in power there.

6/13/2006 10:13:00 am  
Blogger PC said...

"If power cuts are an indication of a "third world" shambles, then doesn't California fall into that category as well?"

Well, it does have a third world, banana republic regulatory infrastructure.

"I haven't lived in NZ all my life, so I have some perspective."

True for many of us I suspect, Berend. But it still doesn't guarantee perspective, I'm afraid.

6/13/2006 10:14:00 am  
Blogger noizy said...

"California has one similarity with NZ and that is that the left is in power there."

Well, how about Italy then? Or Spain? Denmark?

6/13/2006 10:34:00 am  
Blogger noizy said...

"For those who've pointed out that California has had its own power problems, Allow me to point out that California's power industry is not exactly a free market nirvana either..."

It's not a question of 'free market' or otherwise. Your post title asserts that the power outage yesterday was evidence of NZ's 'third world power shambles'. All I was doing was pointing out that if this was the case, then what is considered the world's greatest first world nation (and some others besides) could also be accused of similar third world standards, and that, perhaps, the use of the term in this instance is a bit hyperbolic.

At least most of us have power, most of the time. I'm of the understanding that this isn't necessarily the case in most actual third world countries.

6/13/2006 10:57:00 am  
Blogger PC said...

james, perhaps you'd be more comfortable with a "second world" allusion, like that used below by IIQ:

"Yesterday, more than any day in a long time, I got to feel like we were living in a second world country (I refuse to denigrate the plight of those in truly third world countries, despite that being the first term that comes to mind)."

6/13/2006 11:24:00 am  
Blogger noizy said...

much more comfortable. cheers. ;)

6/13/2006 11:37:00 am  
Blogger noizy said...

The interesting thing about that post is this...

"It is important not to focus on how this Labour Government has had 9 years to do something about improving infrastructure and has so far failed..."

PC - I was under the impression that the power companies themselves were responsible for maintenance and infrastructure upgrades? What steps should the government have taken to avoid the problems that occured yesterday?

6/13/2006 11:41:00 am  
Blogger PC said...

"I was under the impression that the power companies themselves were responsible for maintenance and infrastructure upgrades?"

The "power companies" you refer to are all arms of the state, operating in a regulatory environment set by the state.

Which on its own rather answers your supplementary question, I think, which asks, "What steps should the government have taken to avoid the problems that occured yesterday?"

What the state should so, put simply, is get the hell out of the way.

6/13/2006 11:53:00 am  
Anonymous ruth said...

Intentional partisan framing of this issue, not to mention serial exaggeration.Is there nothing which cannot be blames on "Lefties"?

There is nothing 3rd world about NZ - we have the foreign investment capital to prove it- NZ is one of the easiest places in the world to do business, which would hardly be the case if we had 3rd world infrastructure.

Libertarians can kindly demonstrate that the free market will, in fact, ensure there are no ore power cuts.

6/13/2006 12:43:00 pm  
Anonymous spam said...

I was under the impression that the power companies themselves were responsible for maintenance and infrastructure upgrades? What steps should the government have taken to avoid the problems that occured yesterday?

The government owns many of them, and regulates most of the others. NGC / Vector and powerco are both price controlled, as is transpower. They are limited in the amount they can charge, and the annual increases to prices that they can make. Note that these increases are limited to be lower than the rate of inflation. Because some of these companies are public companies, they have a duty to provide a return to their shareholders. If you're regulated so that your real revenue is falling with inflation, then the only way you can increase (or even maintain) profitability is to cut costs. In this case, it will be maintenance that is cut.

If you want to encourage investment in energy infrastructure, its pretty bloody obvious that you should actually allow companies taking the risks and stumping-up the capital to get a return on their investment thats higher than what they can get by putting the money in the bank, or, in this case, higher than the cost of borrowing to fund the capital expenditure.

BTW - I understand that the price controls were put in place by the commerce commission, and, almost unbelievably in a democracy, with no right-of-appeal.

6/13/2006 12:58:00 pm  
Blogger Elliot said...

Oh Peter...you're not unpatriotic, just a realist!

6/13/2006 10:28:00 pm  
Anonymous Anonymous said...

Most of the MPs in parliament have got huge power in their heads. Nandor & Rodney could have taken a quick flight to Auckland from Wellington to power up the city during the long cuts by putting their heads into the Generator in Otahuhu.

6/14/2006 02:29:00 am  

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