Daily review 01/10/2025
Daily review 01/10/2025
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5:30 pm, October 1st, 2025 - 6 comments
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Daily review is also your post.
This provides Standardistas the opportunity to review events of the day.
The usual rules of good behaviour apply (see the Policy).
Don’t forget to be kind to each other …
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October snow and then frost, power bills sky-high, manufacturing collapsing…
… and this governments' response is to write a letter to power companies handing them money.
Apparently the alternative was government selling its shares in the gentailers (NZF being the block) and it investing (in such as geothermal, systemic use of solar and batteries etc).
Presumably Jones hyperventilates at the prospect of expensive imported gas and cheap coal path.
The government has no idea what to do as per increasing base supply (reducing reliance on hydro), so just suggests some money to the 51% companies (solar and batteries etc).
When the bolder option was direct investment in support to that system.
It could have considered providing money to all of them, as part sponsor of a 5 company owned geothermal facility.
But they want to remain addicted to cheap dirty coal.
https://www.thepost.co.nz/politics/360841052/frontier-economics-power-report-too-hot-handle
As I have said here many times Ad, and speaking as a qualified cost accountant, power costs represent only a small overall portion of manufacturing costs, say at most 15% (probably less). So a 20% rise in power prices adds 3% to costs. A 4-5 week spike in power costs where they go up 50% over this period adds 0.7% to annual costs.
If a manufacturer goes to the wall because of this it isn't because of power costs but because it wasn't viable in the first place.
Shane Jones was lying about this so that he could blame Labour.
The large businesses that have closed aren't blaming power price increases for everything, but as a factor. If you look at the businesses which have closed they are commodity manufacturers with low value-add for whom electricity is a higher proportion of the costs of running than you state.
The big ones are represented by the Major Energy Users Group.
Manufacturers across New Zealand have said that power costs threaten their businesses; Winstone Pulp and Oji Fibre Solutions, paper mills that closed last year, said that the cost of electricity in New Zealand was one reason they couldn’t continue.
“We should be in a position where our country has abundant renewable energy that is low cost and secure,” said Karen Boyes, the executive director of the Major Electricity Users Group, in an interview on Q + A in July. Fluctuating power prices make it hard for businesses to plan for the future. “You need certainty for more than three to six years if you’re going to keep investing in infrastructure,” she said.
You may remember that the previous government went to great lengths to subsidise major businesses to convert away from coal. Including Glenbrook Steel and Fonterra. They also did the same with school heating systems.
Manufacturing in New Zealand is by and large a commodity system with very marginal profits, so while I appreciate your experience I think our major manufacturers and users are giving us a consistent message, as did the previous government.
Agreed that power costs are "one reason" firms close.
What bugs me is Shane Jones saying that rising power costs is "THE" reason for closure, and the MSM, including RadioNZ, repeat this endlessly verbatim.
(And it is all National’s Max Bradford’s fault anyway)
Backup Supply in dry years.
1.
Importing liquefied natural gas (LNG) is costly.
2
Coal stockpile (thermal rejected).
https://www.rnz.co.nz/news/business/574695/government-takes-softly-softly-approach-to-energy-reform