Politics 🗳️ NZ Politics

[MrFrankWhite]

Do you mean it would destroy profitability for the electricity retail companies? Or the network itself? Explain.

Think of it like the milkman. When everyone on the street buys milk, its profitable for the milkman, because he has to make the drive regardless. Now if only half they street buys milk, his revenue is halved but fixed operating costs remain the same. (the same drive). Now imagine that half that doesnt buy, they all have a cow, because a cow makes milk for free. If you need lots of milk 24/7 then 1 cow isnt very efficient. So you start calling on the milkman on-demand. The issue here is the milkman never knows how much milk to take on his run,. too much and it spoils, not enough and people run out.

Now imagine politicians advocating for more milking herds and for everyone to have a cow too. Problem is milk goes off so now govt has to buy everyone a fridge (analogy is a shit fight but stay with it).

 

[Rizzah]

Think of it like the milkman. When everyone on the street buys milk, its profitable for the milkman, because he has to make the drive regardless. Now if only half they street buys milk, his revenue is halved but fixed operating costs remain the same. (the same drive). Now imagine that half that doesnt buy, they all have a cow, because a cow makes milk for free. If you need lots of milk 24/7 then 1 cow isnt very efficient. So you start calling on the milkman on-demand. The issue here is the milkman never knows how much milk to take on his run,. too much and it spoils, not enough and people run out.

Now imagine politicians advocating for more milking herds and for everyone to have a cow too. Problem is milk goes off so now govt has to buy everyone a fridge (analogy is a shit fight but stay with it).

The issue is there is a major profit incentive for the generator-retailers in NZ to maintain limited capacity. Our State Owned Enterprise (SOE) legislation appears to be really poor and prioritises profit generation over almost any public good.
Also evidence of the four major Gentailers using borrowing and non-cash accounting adjustments to overpay dividends.
In 2014 - 2021 the four main Gentailers (Genesis, Meridian, Mercury and Contact Energy) paid out 3.7 billion MORE in dividends than they generated in profits.
In 2023 the same companies distributed $1.1 Billion in dividends, yet only earned $521 million in net profit.
The under investment in renewable generation has resulted in constrained supply, which drives up electricity prices and benefits shareholders at the expense of consumers. Despite 80-90% of our electricity being generated cheaply from legacy renewables like hydro, fossil fuel generation during peak load sets the market price, inflating costs across the board and further boosting gentailer profits.

 

[Mr. Brownstone]

Thats like 3x Australia. thats fucked up. Im with you on that.

No it isn’t, Aussie spreads on a tangible capital basis would be around 400bp right now and NZ supermarket profitability has fallen sharply in the last couple of years.

 

[wizard of Tauranga]

The public service isn’t just bureaucratic managers; it includes teachers, nurses, doctors, specialists, police etc etc.
My point is Government funding should be used to expand economic capacity by investing in skills development through universities, polytechnics, trade apprenticeships and innovation via R&D and overall infrastructure investment.
All of which benefit both the public and private sectors. By supporting workforce skill training and innovation via grants for research, the government stimulates innovation and job creation, expanding economic capacity and drives long-term growth.

I strongly agree with all this, alongside strongly pro business policies to create the employers for all these people.

The government can stimulates innovation and job creation but it’s innovative and productive companies that execute it and expand economic capacity.

 

[MrFrankWhite]

The issue is there is a major profit incentive for the generator-retailers in NZ to maintain limited capacity. Our State Owned Enterprise (SOE) legislation appears to be really poor and prioritises profit generation over almost any public good.
Also evidence of the four major Gentailers using borrowing and non-cash accounting adjustments to overpay dividends.
In 2014 - 2021 the four main Gentailers (Genesis, Meridian, Mercury and Contact Energy) paid out 3.7 billion MORE in dividends than they generated in profits.
In 2023 the same companies distributed $1.1 Billion in dividends, yet only earned $521 million in net profit.
The under investment in renewable generation has resulted in constrained supply, which drives up electricity prices and benefits shareholders at the expense of consumers. Despite 80-90% of our electricity being generated cheaply from legacy renewables like hydro, fossil fuel generation during peak load sets the market price, inflating costs across the board and further boosting gentailer profits.

Very true but renewables arent great for generating power, thats why power companies dont like building them. Excess solar turns prices negative. Do you think negative unit prices are a great signal for investment?

 

[MrFrankWhite]

fossil fuel generation during peak load sets the market price, inflating costs across the board and further boosting gentailer profits.

No, the lowest on-demand generator sets the market price. Which is always fossil fuels because renewables + storage cant do that. If you had nuclear then that would set the price.