Wolak strikes back
Remember the energy policy disucssion (here and here on TVHE) – where the Labour and Greens took a number from the Wolak report to try to justify a single buyer model. Via a reader here is Frank Wolak himself: (More details here)
The Labour-Greens’ single buyer electricity policy has a problem.
While it remains politically resonant with voters who perceive power companies as rapacious and inescapable, the American academic whose analysis is a key plank of the Labour-Greens NZ Power proposal says the Opposition parties have got it wrong.
Not only that, but Stanford University’s Professor Frank Wolak – a top US electricity markets academic and one-time regulator – says that despite repeated assertions to the contrary, he never concluded that power companies here had ripped off consumers to the tune of $4.3 billion over the mid-2000’s.
Unfortunately, that $4.3 b figure has been the smoking gun fact around which the political argument for the policy has been built.
He does say:
Rather, he would regulate the hell out of the monopoly national grid owner, Transpower, and the local electricity network monopolies. Because even though he’s a market kind of guy, Wolak is no fan of New Zealand’s “light-handed regulation”.
“Light-hand regulation is no regulation,” he says. Instead, New Zealand should “man up and regulate” in areas where no competition can occur.
Wolak is also no fan of New Zealand’s vertically integrated generator-retailers, which does put him on-side with the Labour-Greens NZ Power policy.
But he is no single-buyer fan. His solution is more competition, and regulation where you can’t get it – not state monopolies. This is not my area, so I’m not saying I agree with him here or not – but I do find the argument against a state monopoly and towards competition intrinsically sensible 😉
Side point here – I’m all for the Greens and Labour talking about distributional issues, hell yes! But just be a bit careful convoluting them with competition issues in this sense 🙂
Update: Looks like there was a bit more detail in the business Kiwiblog is commenting on.