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Broadcasting in New Zealand
(A contrast between how our public broadcasters portray
the history of the New Zealand Electricity Industry
and the more probable reality.
Posted 15 April 2009.
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This was originally written as a posting on the NZ Sustainable Energy Forum (SEF)
Each weekday afternoon Radio New Zealand National broadcasts a discussion group called The Panel. Typically The Panel consists of the host, two prominent NZers (usually media people) and guest experts who provide supplementary commentary on the topics of the day.
These extracts of the discussion with experts Geoff Bertram and Max Bradford on the current NZ Electricity Market are from the broadcast April 1 2009. Contrary to what some may suspect, the broadcast is not an April Fools Day gag.
Note: Unfortunately Radio New Zealand is not true public broadcaster and restricts public use of all the audio files it creates on our behalf. Thus this audio remains on its website for a week and then it disappears. Citizens are not permitted to broadcast the programme and thus I cannot provide the full broadcast. The transcriptions are true as I could make them with my limited facilities.
Each quote is accompanied by my commentary.
Geoff is a senior
lecturer in the school of Economics and Finance at Victoria University.
Energy and environmental economics, deregulation of natural monopoly, employment, economic growth and development. Geoff's current research is on "light handed regulation" in New Zealand will particular reference to the electricity and gas network industries; economics of small island development; and current account sustainability."
I have no formal
training in economics/accounting or journalism for that matter. I am a
As a student in
the late 1960s I often shared the company of students of these
disciplines. I recall discussing the latest lectures of their professors
and becoming incredulous that many of the students accepted the theories
as a sustainable reflection of reality. Even pre the Club of Rome some
of us perceived the limits to growth and I could see in this context
that the economic theories being espoused were dangerously delusional.
Alarm bells rang for me when I noted these folk graduating to take up
positions of responsibility in the late 1970s in a wide range of
institutions, including our Treasury.
It was only when
I lived their policies in the general Economic Reforms of the 1980s and
the Electricity Industry Reforms in particular that I realised that
“business” academia and its graduates really believed their
delusional economics theories and I
experienced the brutality of their theories.
occurred in Wellington. A significant number of the “consultants” I
encountered “advising” on the Reforms were Victoria University
graduates and I often noted that the University was a cheerleader of the
Reforms. (They have since given honorary degrees to the arch proponents
of the Electricity Reforms such as Fran Wilde and David Caygill.
So I determined to find out just exactly what Victoria
University is teaching our young people. Over the last decade I have
attended hundreds of lectures and forums of their education, geophysics,
business admin, economics and accounting departments. In general I found
they are characterised by a lack of science, egoism and general
context I rate Geoff Bertram among the saner and least damaging
Geoff is aware
that I worked for decades in the Bulk-generated electricity industry and
on at least three occasions I have offered him my insights. As is the
norm at Victoria University he evidenced not the slightest interest in
my insights, perhaps because he felt meter readers have little to offer.
From my point of view I came to believe his “expertise” is not
founded in reality.
The reality I
refer to includes the historical fact that over 60 New Zealand
communities, representing every region of the nation, got together and
designed and built over a period of nearly a century one of the most
sophisticated electrical grids on the planet. The fact that all the
communities owned their local grids freehold in democratic way was a
testament to the depths of the ingenuity and profound intergenerational
care and stewardship of those communities.
On the occasions
when I have begun to tell our bright young “business” graduates of
this reality their eyes soon cloud over with incredulity and they
dismiss it as geriatric humbug and mistaken nostalgia. Their incapacity
to begin to imagine such a reality is understandable
For them life
begins about 1984 and it is arguable that they have been subject to
serious deceits about history. I have written before on SEF how we
employees in the industry were repeatedly told during the Electricity
Industry reforms we were “history”. This had multiple malicious
meanings: our knowledge of the industry’s history was now considered a
liability and we were to be sacked i.e. would be made “history”. As
I have noted before TransAlta executives even binned my 25 years of
employment records, threatened to “legally annihilate” my family and
much worse if I did not shut up and keep right out of the industry.
this revisionist process indirectly for several years before I was
subjected to it myself. On my meter rounds I had continually came across
very talented, experienced and honest individuals who were similarly
sacked from Telecom, Ministry of Works, DSIR, NZ Rail and other
ex-Government structures. Often they told of how they were punished for
blowing the whistle on threats to the public good generated by the
economists dismissed this group, generally over 40 years of age, as the
“lost generation” because we were deemed unable to adapt to the new
Rogernomic order. (Remember TINA or There IS NO Alternative?)
A clear pattern
of behaviour is evident and Enron/US policy documents of the 19so-90s
support the belief that this suppression of history was deliberate
policy. At Enron, for instance, 10% of all employees were sacked
annually as a matter of policy to constantly ensure strict conformity
and eliminate unwelcome knowledge and questioning of the corporate
Check out the
attend lectures on business and “policy” at our universities.
For instance ask
for the minutes of the Wellington City Council meetings with the
above-mentioned consultants surrounding the decision to sell Capital
Power. They are classified not for public release.
pretend you are a young student and do a search on Google on “NZ
electricity industry history”. These three were the prime ones that
came up page one a minute ago:
Note the common
thread - life starts in 1987. Also note how the Mercury money-go-round
omits to show that a large quantity of funds are siphoned off as
dividends to principal shareholders and as interest to merchant banks.
Also check out http://en.wikipedia.org/wiki/New_Zealand_Electricity_Market
“..the original idea of breaking the industry up and doing a bit of privatisation and restructuring was to move to a competitive market …”.
The reality is starkly different. A global oligarchy of bankers were
desperate to find ways of maintaining credit expansion. For instance
they had been impacted by the 197p mineral oil price spike and had
generated irresponsibly large loans in Third World countries who were
now defaulting. Also the Savings and Loans collapse was revealing them
as bankrupt. The freehold
community-owned grids in countries like New Zealand represented real
wealth and the bankers determined to replace community owned structures
with privatised (so called “coporatised”) structures restricted by
narrowly defined profit imperatives. These structures would enable them
to lever off the wealth, maximise their short term profits from burning
global fossil fuel reserves, generate large loans and thus stave off the
collapse of their credit structures.
These actions have to be also seen against the wider historical context in
which the bankers have attempted to suppress distributed generation and
control the flow of information for most of the age of reticulated
electricity. They did not want communities to be able to control the
potential of and benefit from the confluence of the broadband,
Distributed Generation. “smart” metering and appliance and other
technologies. In short, they wished to suppress democracy for that holds
within it the seeds of real sustainable competition.
Check out the reality:
Talk to honest councillors, mayors, power board members etc of the 1990s and
they will tell you how the consultants pressured them through a
compliant media/academia and directly as consultants to “start
realising” the value of their electrical grid assets by selling them
or, failing that, taking out large loans against them for building
roads, sewers etc.
Check out the relative rates of debt in communities before and after the
Electricity Reforms and the comparative value of community Trusts.
Check out NZ’s relative fall in rated Internet use.
Check out the relative loss of intelligence and increased incoherence of
NZ’s electrical grids now.
Check out how not one NZ community can now own their local electrical grid
and its intelligence or effectively compete in the Electricity Market
Check out how Michael Cullen sold TransPower to Wachovia Bank and immediately converted Meridian’s $800 million “special dividend” from the sale of Oz assets into an extra subsidy for car and truck owners – a double negative whammy as the funds were diverted from much needed Bulk-gen electricity demand reduction to extremely high-risk motorway investment.
Geoff Bertram Re competition
“with Max Bradford coming on you about to hear one minister who did try to stir the pot…”
“The small part of the Reforms that I put in place…”
Max’s 1998 reforms represented one of the single greatest acts of
disenfranchisement in New Zealand’s history and destroyed the capacity
of all New Zealand communities to make democratic and intelligent use of
their local electrical potential. The price of this act is now becoming
dreadfully apparent as mineral oil/gas reserves dwindle and communities
begin collapsing amidst debt and unemployment.
The concepts of competition espoused by Geoff and Max are facile.
True competition exists when communities have full access to national
markets and a wide range of options. These options include the full
democratic rights to use their grids to fund products and programmes
that reduce dependence on single products such as Bulk-generated
electricity. These may include consumer controlled monitoring
and generating technology such as small scale electrical
generators, insulation and storage systems, communication systems and
information collation systems.
Max’s reforms destroyed this competition and gave almost exclusive rights
of control of intelligence to the Bulk-gen electricity bankers. As I
have noted on SEF before, David Parker’s parliamentary profile stated
till very recently how he entered politics because he was so outraged by
the 1998 legislation disenfranchising communities. However he and all
other Labour Minsters have
worked to embed Max’s reforms into our legislation and into our
(Note as I write it is being announced that Don Brash has been appointed
to the TransPower Board and Michael Cullen to the NZ Post Board
Panelists Linda Clark on Afternoons (Nat Radio) observe that these
appointments show the “non-tribal” politics of the appointments and
David Farrar notes that “Don Brash’s appointment to Transpower is a
very smart one because everyone
says that is the SOE you could never possibly sell.” It is a searing
indictment of our national state of affaires when a group of our top
journalists are unaware that Michael and Don are twins in the same
“tribe” and Michael effectively sold TransPower to Wachovia Bank in
I will provide one single practical example to illustrate the nonsense of
Max and Geoff’s statement. The Reform legislation resulted in the
metering and ripple control technology on consumer boards being
transferred to what is euphemistically called the “retailers” or as,
Geoff calls the generator-retailers, the “gentailers” (Not to be
confused with “gentle folk” or “gentlemen” though they do form
an elite gentry or ruling upper class). The official rationale is that
this transfer would promote competition and innovation of products.
Here is the reality:
commonly make optimal profits when the national grid is stressed and so
they have no interest in promoting wise uses of electrical products and
effective load control systems. Hence the ripple control system, once a
world leading product, languishes and is even considered a liability in
Geoff’s “Gentailers” are simply not going to invest in metering that
empowers consumers and allows them change companies with ease if their
investment in the technology is at high risk from customer “churn”.
If they rent the meters off so-called “metering companies” then
those companies are not going to tailor design for any particular
retailer when it could be subject to “churn” either.
Similarly the ‘gentailers” have no vested interest in using their
critical intelligence to maintain accurate and secure metering because
they can simply pass on the costs of meter slippage and pilfering.
The only group who have a true vested interested in intelligent metering are
consumers and Max’s legislation has now effectively barred all
communities from owning their intelligence.
Ring up your Bulk-gen electricity supplier now and ask if you can use their
new “smart” technology to broadcast your dwellings intelligence to
any party of your choice and this answer will be no.
Find out where the $700 million or so rental fee went that NZers have paid since the reforms for the use of their previously freehold meters.
“…For the three years when as he (Max Bradford) says electricity prices were held down by competitive pressures the critical thing that was going on in the electricity industry was there was one retailer (TransAlta) there that was fairly large and was independent of the generators and kept pressure on their margins…
Certainly domestic Bulk-gen electricity prices levelled off in that period
but to say the critical factor was TransAlta suggests a lack of
knowledge of the general reality. During that period global mineral oil
prices were at historical lows (as low as $US9.98 a barrel) and this
profoundly affected every aspect of our society. Almost everything
became cheap. Also it is easy to minimise price rises short-term if you
flare off valuable mineral gas reserves, gut critical systems such as
Civil Defence,”energy efficiency” programmes and are prepared to
gamble heavily with customer security as the TransAlta structure did and
as other Bulk-gen electricity corporations did.
And TransAlta was a generator in its own right with significant shares in
the construction of two gas fired plants that during this period helped
accelerate the depletion of the cheaply accessed Maui gas and that were
responsible for half the increase in NZ’s carbon dioxide emissions
though this period. Globally TransAlta was increasing its investment in
generation and by the end of the period owned about 9000 megawatts
capacity. I recall its
statements of that time of its plans to extend it capacity in NZ to 2000
megawatts. Its 400 megawatts of gas fired plant gave it a pivotal role
in our network and Electricity Industry politics.
TransAlta failed in its bid for SOE Contact Energy but it is highly probable
it anticipated being able to buy another of the SOE Bulk-gen electricity
generators on the cheap, especially with Mervyn English as CEO (brother
of Hon Bill English and now manager at the Electricity Commission.) The
change of Government in 1999 reduced that probability and so TransAlta
sold out of NZ at a very significant profit ($NZ350 million according to
its Calgery website at the time) and left AGL-NGC holding a mange-ridden
dog of an operation that died soon after in 2001 at the same time as
Note: TransAlta used the same architects here as Enron – for instance,
Arthur Andersen and Co. Both my experience of working with these
architects and the US literature suggests that that they saw humans as
simply expendable tradeable commodities without civic rights and they
specialised in strategies for suppressing innovation and competition. I
have detailed some of these on SEF before. See the implications below re
The quotes also fail to reflect the political reality of that period.
Communities had become alerted to the fact that the arguments of
proponents of the Electricity Reforms were profoundly flawed and many of
them refused to sell off their local grid and its intelligence.
Communities such as Hamilton even bought back their local grids.
Traditionally some communities such as Christchurch operated very intelligent grids by world standards. Even handicapped by having to operate as ‘profit driven corporation” SouthPower provided a world leading model of good practice. Thus it easily outperformed TransAlta on almost every account and made a lie of the arguments of the bankers and their proxies. Max’s own ideology was revealed as embarrassingly flawed and he was also subject to pressure from the bankers and the likes of TransAlta to stop this “unfair competition” from the likes of Southpower.
The Christchurch community used the intelligence of its local grid to
identify and alleviate poverty, pollution and ensure people could keep
warm. The NZ Treasury did not like this (a) on ideological grounds and
(b) because it affect tax revenue - the poorer majority do not have the
means to bypass GST as do the richer minority. The city was able to use
its intelligence, for instance, to reduce the amount of GST transactions
paid by its residents on Bulk-gen electricity transactions to under half
that paid by people in Wellington under TransAlta.The Business
Roundtable condemned the community as “the People’s Republic of
Christchurch” which the people turned into a complement. The
Roundtable on visits to the city was greeted and mocked with t-shirts acclaiming
the city as The Banana Republic of Christchurch. I am told Max got the
same reception in the city and it was made clear to him people there
were aware of how Southpower outcompeted competitors on a wide range of
This became very evident to the public after TransAlta used Max’s 1998
reforms to buy the intelligence of SouthPower and Christchurch people
became subject to the relatively chronic practices of TransAlta.
Max was very much a
Treasury man. He joined it in 1966 and had been “section head
in the energy, economics and industry divisions concentrating on the oil
“The small retailers who would have made a competitive market really fly basically packed up and left very quickly in 1998 as they saw how the Reforms were shaping up..”
Part of the original rationale
for the Reforms, clearly articulated by their architects here and the
USA, was to disenfranchise people and make them tradeable commodities.
Control of the intelligence associated with “retailing electricity”
would enable the new owners develop lists of consumers and (a) market
directly to them a wider range of products and (b) market the lists of
Probably over one million NZers have already been traded already this
century and few would have been aware of the implications. As mentioned
consumers have no rights to own information about their dwelling
processes and broadcast it to agencies of their choice. This information
is effectively controlled by their Bulk-gen electricity supplier.
When Max forced the people of Christchurch to sell its intelligence and
customer lists TransAlta paid about $700 a customer. This was indicative
of the the market trade. Contrary to what “experts” at EECA etc
insist this price was not the purchase of the metering. Most of the
meters in New Zealand had been brought freehold decades before the
Reforms and had long been written off. The typical new meter could be
imported for $NZ50 dollars or less.
Max’s Reforms simply gifted crtical elements of the ripple control
technology to the likes of TransAlta as load control had no value in the
new framework. So that does not figure much in the prices of the trades
The real value was seen to be in the people-trade and that is why TransAlta
rapidy amassed 32% of all New Zealand Bulk-gen elecricity consumers onto
The reality is the likes of Fresh Start (one of the small retailers Geoff
alludes to) realised there was a quick buck to be made. They paid people
ten bucks an hour to go around neigbourhoods like Porirua offering people to sign up with Fresh Start and receive a $50
cash payment. They could then sell these lists on the “people
market” to bigger retailers for hundreds of dollars. Which they did.
“…Geoffs quite right – when the gentailers eh/or generators were allowed to vertically integrate into retailing which happened under Labour Geoff, not under National, when that happened then you had a situation where effectively the power companies - most of which are still Government owned - which act in concert- if not formally in concert then certainly they act together – they really stymied the development of real competition and until that issue is dealt with its going to be difficult to get true competetion to work again…”
The reality is Max’s Reforms enabled this type of vertical integration –
its just that it takes a couple of years to happen.
Max is correct: what he ignorantly calls “the power companies” do act
together when it serves their short-term interests. All the big
corporations collude, within and between sectors.
Coca Cola and Pepsi Cola collude to prevent any cultural shift that makes
people question the wisdom of consuming large quantities of
life-threatening sugared water –especially if you are a destitute
farmer who is conned into trading the family hen for a bottle of “the
real thing”. They divert the public focus from asking if the product
is needed or safe by creating apparitions of competition and bebate over
which of the two “products” is the best.
Similarly butter and margarine corporations invest heavily in promoting
debate as to which product is the best, rather than if both products are
still necessary in an age of rich food seasonings.
Similarly the bankers of the Bulk-gen electricity and fossil fuel
corporations maintain illusions of competition while colluding at every
level to ensure legislation is not enacted that enables dwelling scale
generation technology and carbon taxes.
This collusion is enabled by a culture of “commercial sensitivity” and
copyright enforcement that is so dense that the collapse of our global
civilisation is very iminent because copyright has effectively blocked
and destroyed our most sustainable options. The statements of Max and
Geoff and the Electricity Reform legislation evidence no cognisance of
the profound risks we now face from escalating wealth inequity,
pollution and mineral depletion.
Sustainability lies in the existence of deep democracy/science, for these
enable vital transparency and free flows of knowledge. Human beings
forget this at their profound peril.The Electricity Reforms are designed
to destroy science and prevent this empowerment. You only have to
witness the current acceptance of the bankers’ equation “Energy =
Bulk-gen electricity/fossil fuels” in all our media and academia to
know the truth of this.
“… In the 1980s model where Government owned the whole industry..”
This is classic illustration of the deceit, the dereliction of academic
stanards, the denial of history and the devaluing of communities and
democracy that pervades our universities, media and policy makers. The
private corporation model was failing NZ in the early 1900s. So
communities used their councils to buy the private “electric light”
companies up so they could ensure everyone could have access to
electrical products to drive their lighting, heating and other
Communities got together and formed Power Boards for the same reason.
Certainly the Government later on built and owned the Bulk-gen electricity
plant in general and what is now TransPower. However much of this was
designed to serve the interests of large corporations such as Comalco
and arguably represents a net loss of wealth/loss of opportunity for
It is hard to quantify the wealth of the community-owned structures as much
of it was intangible, involving the state of science, community cohesion, the use of prime urban land,
intelligence, potential to create/adopt new technology and the reduction
of risk in times of war and civic threat from earthquakes, storms etc.
The Electricity Reform legislation forced the transfer of these community
owned assets to the bankers in a process that placed zero or minus value
on signifcant elements of this wealth. Comprehensive accounting would
suggest the Government actually owned a minor portion of an electrical
system with a real value of hundreds of billions of dollars(NZ).
Geoff’s statement, along with the general dogma of our academia and media,
is a serious misrepresentation of history and adismissal of the hard
work, generosity and stewardship of New Zealanders.
“Geoff Bertram you are essentially saying that instead of creating a competitive situation with the you know the accompanying engenuity that is part of the market.. instead the Government, a series of Ministers, created a cozy club…”
Ministers allowed a cozy club to create itself..”
is correct in as far as the Government created the Electricity Industry
Reform legislation. However it is doubtful that any Minister now has the
capacity to counter the very powerful forces behind the legislation. The
new Labour-led adminstration in 2000 quickly found itself very much on
the defensive and had to embark on a campaign to prove it was
“business friendly” and the appointment of David Caygill to head the
Government Inquiry into the Electricity Industry was a signal the Reform
legislation would remain intact.
David Parker was appointed Minister of Energy he was put through the
rumour mill wringer to ensure he became compliant. He sacked the
Electricity Commission chairman Roy Hemmingway to keep the likes of
Wachovia Bank/TransPower happy.
Prime Minister Helen Clark through the Minister of Finance, Michael
Cullen, have admitted they were powerless to change the legislation. It
is probably more helpful to say that Ministers are pretty helpless in
our current academic, media and education culture to stop a cozy club
“the market”: when Afternoons, or almost anyone at Radio NZ
talks of “the market” it is helpful to be aware they make a myopic
use of the “market” symbol. Usually they use it as in the equation
“The market = StockX or Mark Weldon Inc.( a company smaller than many
mid sized Australian corporations). When they talk about “the
markets” they only mean stock/share markets which, as we are now
finding out may trade trillions of dollars but they only trade a small
proportion of the real wealth (food, shelter, labour etc.) When they
talk of the Electricity Market they refer to M-co, a small company that
has only existed a meager 15 years.
most of the “ingenuity of the market” referred to exists outside
Radio NZ’s definition of a market in the much greater world of
humanity. And as I illustrated earlier the myopic markets referred to
are fundamentally hostile to competition and ingenuity, especially the
current Electricity Market which excludes the intelligent and democratic
participation of 99% of New Zealanders. The tiny group acting for the
bankers who can participate in the current Electricity Market evidence
considerable ingenuity but it is only used to generate and sustain a façade
of competition and freedom of choice for all.
“Max Bradford the former Minister of Energy..”
Max never was the Minister of
Max is clearly confused about the nature of energy the reality is he is
a rarity in this dumbed-down “energy conscious” age that the bankers
have shrouded civilisation with this last four decades.
memory he is the only Minister of minerals and electrical products who
has not had the supreme arrogance or ignorance to symbolise himself as
the “Minister of Energy” in three decades.
As can be seen below he has a vision that energy is a subset of commerce and something extra to this universe drives industry. This is pretty inane but it represents a relatively low risk and minor destruction of science compared to every other similar minister since about 1977.
Six years ago Radio New Zealand interviewed one of the US architects of the NZ Electricity Industry Reforms. At the end of the interview with William Hogarth of the Harvard Electricity Policy Group Linda Clark, the host of Nine to Noon, complained that the Reforms are "fiendishly difficult" and talking about them "makes my head hurt". I wrote a hurried letter to her as a sanity salve, in which I explained that the Reforms are designed to be fiendishly difficult and are insane. I also pointed out that there are relatively simple and sane options - many of which existed before the Reforms.
Sometimes I despair for Radio New Zealand. As you can see from my note to it in 2003 it seems incapable of learning and persists year in year out in asking the same unhelpful questions.
In brief, it is unhelpful to ask, as Radio NZ Afternoons does,
why the Electricity Industry Reforms are not working. It’s the wrong
question because the Reforms are working extremely well and are
achieving almost every objective in their design. Communities are now
disenfranchised and heavily debt ridden and the oligarchy of bankers now
control most of our options, including the design and use of our
dwellings. It is more helpful to ask who are the Reforms designed to
Re Hon Gerry Brownlee
It is clear from his symbolisation of himself as Minister of Energy and Resources that Hon Gerry Brownlee is a hopeless case too. Analysis of his language suggests he is a mindless agent for the bankers too and he will ensure they maximise their short-term profits through restricting national investment to vastly inefficient Bulk-generated electricity schemes such as flaring off remaining mineral gas reserves to generate Bulk-gen electricity products.
I rest my case on this statement made by Gerry on Morning Report on the same day as Afternoons discussion:
would be a very bold and stupid Energy Minister who would say they can
Just in is this article in the Business
….“Ceramic Fuel Cells has
developed a small $6,000 home generator that has an 85 per cent
power/heat conversion rate. A normal large power station has a 40 per
cent power conversion rate. Ceramic’s high conversion figures have
fascinated a whole range of European and Japanese power utilities who
can see that the units can slash greenhouse emissions and halve the
amount of gas required to generate home/office electricity and heating.
And as the energy is produced in the home or office there is no
transmission waste, although surplus electricity can be sold back to the
…. Ceramic has a
number of agreements with utilities that may generate major orders in
Europe, but my experience is that dealing with utilities is very slow
Two thoughts occur:
I wonder whatever happened to Southpower’s
revolutionary “Whispergen” gas fired home generator?
The NZ’s Electricity Industry Reforms are part of a chronic global
May you enjoy the full bounty of your electrical potential.
The Sustainability Principle
“When a symbol use works
to deny change it will materially alter the potential of the universe
(energy) in a way that results in a reduction in the capacity of the
symbol user to mirror reality. When a symbol use works for the
acceptance of change it will increase the capacity of the symbol user to
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