27 Apr 2013

Broking firm critical of Opposition's energy policy

6:25 pm on 27 April 2013

Labour and the Greens are taking exception to criticism of their energy policies by broking firm First New Zealand Capital.

The parties say they will press on with plans to sell all electricity via a state agency if they are voted in at the 2014 election.

First New Zealand Capital says proposals to reform the electricity industry are based on exaggerated claims of how fast power prices have actually been rising.

It says in real terms, retail prices have risen just 0.5% a year since 2008 and will actually start falling.

But Labour finance spokesperson David Parker says prices should have been falling earlier, because of hard economic times.

Mr Parker says the increases started from too high a base because electricity companies pushed up the value of old power plants to modern levels.

The Green Party's Gareth Hughes says the fact that First New Zealand Capital is taking part in the privatisation of state-owned Mighty River Power as an approved share trader affects its view on electricity prices.

New Zealand First Capital insists its comments relate to energy policy and avoid discussion of Mighty River. But the Greens say the company's stance is bound to be affected by its status as a share trader.

Energy economist Geoff Bertram has challenged First New Zealand Capital's view.

Labour and the Greens say power price rises under have been excessive from 2000 until now. First New Zealand Capital says after deducting inflation and lines charges, the rises have been reasonable.

But Geoff Bertram, of the Institute of Government and Policy Studies, says if inflation and lines charges are factored in, prices have risen 4% a year in that time.

Mr Bertram says by writing up their own value, the companies have been able to charge higher prices while appearing not to be charging too much.