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Response on the Sustainable Energy Forum to Sunday Star Times article which claimed Harry Stebbing's research is a "bombshell for generators".

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Radio NZ Link featuring Geoff Bertram 9 March 09

06:40 Govt urged to help small scale renewable energy schemes

The Government is being urged to break the deadlock that large power companies have on renewable energy. (duration: 4′03″)


The following may be helpful to newer SEF members and others.

Thanks Molly for the post. I have just read the Harry Stebbing article. I was unable to access a couple of the Geoff Bertram links and the one I could access is in such an incoherent Internet form I gave up trying to read it.

Web note: At the time of the writing of my SEF posting I was unable to link to Acess seems OK now

 I could read enough to see that Geoff provides a greater historical overview than Harry – life begins for Harry in 1969: 

“A series of recurrent crises beset the public utilities in the years following 1969….The campaign for free markets was remarkably successful at both federal and state levels in the United States.” 

This said the articles are framed by two critical errors.

The first is they fail to provide the reader up front with the information that we are in the middle of an ongoing war over how we use our electrical potential.  Banker J P Morgan and Thomas Edison saw from day one of the existence of electrical grids in the 1880s that ownership and control of them could provide them with ownership of the much of the wealth of this planet. In particular an elite of merchant, especially J P Morgan, realised they could concentrate and own spectacular wealth by linking the world with electrical grids that they controlled to Bulk-generators of electrical products that they also controlled. Ownership of these plants enabled them to maximise their short-term profits from their other assets (fossil fuels in particular).

Hence their re-engineering of our uses of the energy power and electricity symbols, as in Energy = fossil fuels/Bulk gen-electricity, power = Bulk gen-electricity and electricity = Bulk gen-electricity.

Also hence their hostility to community initiatives to develop small-scale distributed generation of electrical products and own the intelligence of their local grids enabling load moderation, control of equity issues, education and amelioration programmes etc. 

The extraordinary power this gave them led to such massive concentrations of wealth in the hands of a few “profit driven” individuals that economies imploded in general economic depression, Fascism and global warfare.
Also from day one of electrical grids there has been a profound movement of “service driven” individuals, perhaps epitomised by Nikola Tesla. These people were inspired by visions of how we could “release the great mass of humanity from drudgery”. Historically this movement has been manifest as the endeavours of individuals and their communities to provide all people with lighting, heating and access to technology and democracy. This ethos is manifest in the contemporary vast voluntary endeavours of the Internet, Linux etc. People seem to have forgotten that our Municipal Electricity Departments and Power Boards were established early last century because private companies had failed to serve the interests of our communities. 

The brutal lessons of World War 11 were forgotten or not learned by the new breed of policy makers of the 1980s and for the last thirty years we are back in a cycle where an oligarchy of merchant bankers are gaining increasing control of our use of our electrical potential again and concepts of “energy efficiency”, Civil Defence, social and carbon stewardship etc are now accounted for as liabilities. In this context the current global economic meltdown and the now very high probability of catastrophic warfare by 2013 was predictable and predicted a decade ago. 

The second critical error is that both Geoff and Harry (and other self-styled “energy experts”) frame the discussion as a problem of “deregulation” and “freemarkets”. In doing so, for whatever reason, they have nullified and destroyed the bulk of their arguments while serving the interests of the bankers. Examples from Harry are:

Keywords: energy deregulation, market failure, re-regulation, cap-trade deficiencies… Mainstream neoclassical economists were employed to considerable advantage to make the case for substituting free markets for commission regulation… In both the United States and Europe, so much faith was placed in market forces that it was not surprising that public policy makers failed to appreciate the need to consider other options if deregulation and privatization programs failed to achieve the promised goals of lower prices, greater choice, and more innovation….. First, deregulation has produced two classes of energy utilities. The first is the strong asset-based firms, which are vertically integrated or which incorporate power generation through deregulated affiliates…..”

Similarly I note Geoff describes our situation now as being a “lightly regulated” regime. These uses of the “regulation” symbol are pure Banker Speak and highly misleading. The truth is all that has changed is the regulations and the type of market. What is a “freemarket” for the bankers is a Fascist market for the vast majority of citizens. What is “light regulation” for a few is “oppressively heavy regulation” for the majority.

Before the Electricity Industry Reform legislation was implemented it was legal for communities to create democratically elected, “service driven” cooperatives to participate in the national electricity market and make intelligent use of their local electrical potential. Thus historically we had some 60 community based cooperatives representing every region of New Zealand and these all participated directly in the national electricity market, as did several large corporations.

First the 1993 legislation effectively forbade the existence of “service-driven” groups participating in the national electricity market and then the 1998 legislation removed the right of communities to own their grids and its intelligence. 

***Note re the use of the “retail” symbol:

In the “profit driven” ethos everything is viewed as a commodity – including humans. (Witness the way a million New Zealanders have already been traded this century with little or no knowledge of the implications of that trade. Are you one of them?)  

Thus we now have the equation  “electricity= energy commodity” and it is legislated as an object of “retail”, not “intelligence”. When service-driven community co-ops were legal in New Zealand councils were free to used the intelligence of their local grid to assess the state of local welfare, address equity issues, actively create technology and strategies to conserve mineral and other resources, develop world leading programmes educating their members about wise uses of resources and construct integrated Civil Defence systems. I know this is a fact as I experienced the deep integration of the MED’s intelligence into the Christchurch City Council structures and committees in the 1970s-early 80s. 

The current regulatory regime is vastly hostile to such values and now the reticulation of Bulk-gen electricity is now seen as a retail product “no different to cabbages or bread” and Dwelling-gen electricity is taxed and regulated as a noxious substance.

This amoral construct of our electrical potential was actively promoted here in New Zealand and in the likes of Enron by organizations such as the now infamous Arthur Andersen and Co. 

The regulations are now even more heavily weighted towards the bankers. As mentioned individuals are now unable to effectively own the knowledge of their dwellings consumption patterns. This loss is compounded by the fact that they no longer have a democratic say in how the corporations can use that knowledge.  

I have just received, for instance, a long letter from Flybys offering me “100 reasons to switch to Contact …As a Fly Buys Member, here’s an easy way to power up your points.” 

Now I know Flybuys monitors most of my supermarket purchases and it is rumoured to profit tenfold off every $point I “earn”. Who knows who they sell that information to and how it is used to manipulate prices and my purchases of basic commodities. A Contact Positive Energy/Flybuys deal with the advent of smart metering has vast implications for the design and use of dwellings and the appliances in them. 

I rang Meridian and asked if I could use their ARC technology to broadcast information of my household consumption and practices to agents of my choice. My question was greeted with incredulity and laughter. Imagine if Folole Maliaga’s household could have broadcast to a monitoring computer at their local council or hospital. She might have died a half dignified death. 

I just rang PowerShop the Energy Centre and the call centre could not inform me who would own the meter board in my dwelling if I join them. Initially the operator said I would own the meter but then became doubtful about that. They have promised to get back with a more informed answer.  

The articles in the Sunday Star Times and academic papers reveal the derelict nature of our media, our academia and almost all of our so-called “energy consultancies”. The headline “Bombshell set to hit generators” is garbage and is indicative of how out of touch with reality these groups are. 

The simple reality is that the Electricity Industry Reforms are working exactly as they were planned to when they are placed in the fuller historical context I alluded to
See which of the following boxes get a tick:

National Grid stressed to maximum. Tick

Load control mechanisms disabled if not dismantled. Tick

Not a single New Zealand community now owns or has access to the intelligence of its local grid. Tick

Energy efficiency equated with deprivation. Tick

World leading education programmes promoting wise resource use destroyed. Example Energy Action. Tick

Widespread adoption of Energy Gobbledygook and Banker Speak. Tick

Conversion of freehold community owned network services to highly leveraged Banker controlled instruments. Think Wachovia Bank (Wells Fargo), Babcock and Brown, Queensland Investment Corporation, Cheung Kong Infrastructure Holdings Ltd (CKI), et al. Tick

Reform legislation embedded into new technology systems. Tick

Removal of “service driven” individuals from Bulk-gen Electricity industry and replacement with “profit driven” individuals. Tick

Transfer of hundreds of billions of dollars from communities to corporations. E.g. flat line corporation prices versus exponential increase in domestic prices since the Reforms.Tick upload/64341/g11.gif


Increased control of design and use of dwellings. Tick

Communities effectively excluded from Electricity Market. Big Tick

Repression of distributed generation systems. VERY BIG TICK

Every box a tick.  

Academics, so called “energy wonks” and journalists who do not understand that the legislation is working exactly as it is designed to are either fools or naïve to the point of being menaces to humanity. It is a complete waste of our electrical potential to tie up computers for weeks on end with calculations as Harry is reported to have done. His number crunching will be of no greater help for humanity than that of the mathematical whiz kids who calculated risk in mortgage, currency, commodity and other derivate trades. The algorithms are almost all based on the fallacy that the activities of corporations coincide with the survival of humanity. Most are based on the fallacy that energy= mineral oil/gas and can be priced at 0.1 cents per man-hour labour equivalent. 

Thus my prediction is that because Harry’s work lacks critical context the banking oligarchy will use his calculations and spreadsheets to enhance and embed the unsustainable status quo. In particular I predict:

  • Increased diversion of investment into Bulk-gen electricity e.g. large wind-turbine complexes, thermal plant and dams.
  • Communities will not be re-enfranchised and so permitted to use the intelligence of their grids.
  • Community intelligence and especially true DG will continue to be hobbled by legislative barriers plus increased propaganda of the notions that community involvement is “anti-competitive” and DG too expensive and destabilising of the grid.
  • The number of NZ households without access to WHO levels of heating will grow and the number without access to Bulk-gen electricity for a significant portion of each week will increase too.
  • Harry’s figures will be employed by the above-mentioned oligarchy of bankers to increase their control of our electrical potential and further extract wealth out of our communities. This they will do with the uncritical compliance of our academia, media and policy makers.
  • We will get more headlines about “bombshells” showing “The Electricity Market” needs “more competition” and to “attract more investment” in Bulk generation and Bulk transmission and, shock horror, that the SOEs are “gaming the Market” and what is left of them should be sold off as they are “a hindrance to the development of true free market” etc. 

I hope I am wrong. I will add a few notes for the benefit of those who believe my commentary is unsubstantiated. 

Enjoy all your electrical, solar, carbon and other potentials. 

Dave McArthur

1 Footnote  Re accountability and blame.

Alastair posted on SEF

Murray, We need to be careful about assigning blame here - if all each electricity producer has done is follow their instructions to work to the short term advantage of their shareholders (mainly government), then condemnation is hardly appropriate.” 

This is a difficult balancing act in a small nation where many of us are acquainted, if not related. I recommend watching the movies “The Corporation” and “Enron –the smartest guys in the room”. It is very important that I make it clear that there is a difference between acknowledging the modern corporation is a psychopathic structure and saying individuals in them are fully-fledged psychopaths. We are each retain psychopathic elements, some folk more so than others. It is possible to identify the Electricity Industry Reform legislation as fundamentally a psychopathic construct. 

Those of us who actually experienced the change from being in a service-driven organization to a profit driven organization (in my case Wellington MED to Capital Power-TransAlta) witnessed a huge change in culture. I recall sitting around with other meter readers one day early in the process and we predicted with almost 100% accuracy which staff would thrive in the new culture and which would be “released” over the next couple of years.  

The first group, "the thrivers", which included the new breed of university-educated managers, tended to be self-serving and career oriented. They could not be trusted to stand up for the common good/human rights. PR and Damage Control rather than problem solution was their forte. 

The second group were industry educated, service-oriented, vocation motivated and they could better trusted to put their neck out to protect the common good/human rights. Problem solving rather than PR considerations was their forte. 

We observed how life became very uncomfortable for the latter group as their qualities reverted from being assets for them to being liabilities.  They were sidelined and most were restructured out of the industry if they did not leave voluntarily. 

A country or major industry with a culture that rejects such people as liabilities puts all its citizens at very considerable risk. It is very easy for criminality to infiltrate a nation or industry and thrive in such a culture. I am not saying all those who continue to be employed in our Bulk-gen electricity are bad people. I am saying they become much happier, fulfilled people when they are able to believe their work is more than just a way of keeping off the dole. I believe there are many compromised and quietly desperate employees in the Bulk-gen electricity corporations. They deserve a system that genuinely enables them to care for their communities and “look their children in the eyes with dignity”. (Recent quote from a very able and traumatised person who came from a “service industry” into one of our Bulk-gen electricity corporations and discovered to her horror that “for all their talk, underneath our managers don’t care in the slightest what happens to people”. 

I am also saying those highly paid individuals who control and reinforce the current unsustainable corporations should be made accountable. This includes those in our universities, media and Government. If they persist in promoting policies when there is clear evidence their policies damage the greater good then mechanisms need be in place whereby their income can be clawed back. It is dangerous to say, “these people are doing what the legislation of the country bids them do” when there is clear evidence that the legislation they endorse is putting the majority of the population at significant and needless risk. There is plentiful literature of Fascist Germany illustrating the dangers of this policy. 

I have vivid memories of the abuse I received as a meter reader after the Wellington City Council gifted Capital Power to TransAlta for a token return. Up to 90% of Wellington people opposed this transfer, myself included. People on my meter rounds who I respected and who had previously respected me began calling me a “moral coward”, a “scab”, a “traitor”, a “selfish bastard” for continuing to work and earn money from the TransAlta Corporation. My betrayal was seen as all worse because they deemed me “an intelligent and personable bloke”. Their vehemence and disgust had to be experienced to be believed. It was entirely understandable and I would wish it on no one. Within three years I had “ceased” (Employment Court term) to be a meter reader after 20 years in this vocation.  

Mindful of this context how does one make a dispassionate appraisal of someone like Hon David Caygill? Dave was the youngest serving Christchurch City Councillor at a time when it was an exemplar of how we can use our electrical potential intelligently. I know – I worked for the Chch MED for that decade. The lessons in democratic/sustainable practices were staring him in the face and yet he remained oblivious to them.

As Minister of Finance Dave was pivotal in a “sale” of Telecom that has resulted in the massive destruction of much of our electrical potential. Done in the name of competition it created a massive private monopoly and fragmented our electrical structures in ways that have most probably destroyed scores of billions of dollars of NZ wealth already. At the time when I objected to the proposed sale Dave kindly sent me the Treasury briefing papers promoting the decision to sell. These documents were jaw-dropping in their ignorance and superficiality and I recall as a humble meter reader being shocked to think people were paid for writing such ill-informed and flawed material. (I had worked seven years in the NZ Post Office and knew well its relative integrity, efficiency, historic innovation and potential.) 

As Chair of the 2000 Parliamentary Inquiry into the Electricity Industry, then as a consultant to “energy” Ministers and then as Chair of the Electricity Commission Dave compounded this destruction of wealth by embedding the Electricity Industry Reform legislation into our social and technological fabric. Hon Gerry Brownlie, our new minister of “Energy and Resources”, values him as a potent source of institutional knowledge (MR Nat Radio last week). How does a nation make some one like Dave, arguably the most powerful New Zealander of this last generation, accountable? What is the vision that enabled him to ignore and destroy so much that was sustainable in the Christchurch Council from whence he came? How do we explore this in a spirit without blame?  How can we educate Gerry? A child of ten with even a minor grasp of the Conservation Principle of Energy can see Gerry is away in the Lala Land of the bankers.

It’s a great challenge that we must face if our economy is not to be destroyed by inequity and war.  

2 Footnote re impacts of Economic Reforms as manifest in the Electricity Industry Reforms.

 Here are a few historical facts for the interest of proponents of these reforms in our universities and media. 

Sample successive impacts on Wellington region. 

About 1993 Wellington MED renamed Capital Power and restructured as profit driven entity as per new legislation. Quote CEO John Boshier to staff (perhaps paraphrased a little): “Yesterday we were a service-driven company. Today we are profit driven company. Neither you the staff nor the public will notice any difference. The big difference for us management is that we have always been freehold up till now and thus have never had to do debt management before. That will be new for us…” 

Appliance Show Room closed. 

Large corporations start getting discounted deals and services while small businesses and households, especially those with low consumption rates, become subject to rising charges and a reduction in services. 

Newly established “business customer advisory group” and use of Time of Use data from new logger system goes into limbo –“managers don’t know what to with it in new profit driven ethos”. In the new context promoting true energy efficiency practices in the Wellington community were now counterproductive to new “profit driven” imperatives. 

Policies become driven by fear e.g. “Neigbouring Hutt Mana Energy Trust will put pipe line down to Wellington and suck away our biggest clients and destroy our value.” Panicked or corrupt Wellington City Councillors “sells” 49% of Capital Power to TransAlta and gift it management rights and sale rights. 

TransAlta assumes almost total day-to-day control of asset and begins gutting it of value. 

Total Quality Management Programme goes into limbo. Quote new CEO Peter Blades:  “We have got to the point now where quality is so good we don’t need it anymore”. Note: a Deming fundamental is that profits from quality improvements are used to ensure staff stability. 

Onset of widespread layoffs beginning with consumer advisory officers, including new business advisory group. Systems for Meter reader reports on state of field technology (meters, ripples) are demolished – data now seen as of “no value – you are just there is read meters now, That’s all.” 

(Transalta) deal struck with Saturn to load wrist thick optic fibre on City network poles. (Public told they will be finger thick fibre). I  propagate prediction that this policy will put grid at serious risk. Mayor Blumski and WCC CEO Garry Poole publicly deride suggestion. 

Wellington City Council sells remaining stake to TransAlta. TransAlta lays off most of remaining staff and retains token presence in Wellington City. 

1998 Electricity Industry Reform legislation forces all communities and corporations like TransAlta to divest of either their lines or its intelligence (their so called “retail divisions”). TransAlta retains latter plus Government legislation gifts them about 800,000 meters and dwelling based ripple controls i.e. approx half of NZ meter boards. Other critical elements of the ripple system remain with grid owners, thus destroying all imperatives to maintain meter integrity and effective load control systems.

Note: I asked officials why they gave away such an enormous asset as the ripple relays to the “gentailers” and they shrugged their shoulders, look a bit stupid and said, “ Well I don’t think much thought really went into it… I guess it just seemed logical to give them to the “gentailers” because the ripple relays were on the same board as the meters.” No one could explain to me why the “gentailers” were given the meters and for such a vastly discounted price. Some tried to suggest that giving the retailers the meters would promote “innovation” in products. Clearly these policy makers have no idea of the powerful role metering plays or of what democracy is and the rights of individuals to own the information of their dwellings and lifestyles. History has proven their decision simply provided the meter owners with a pure cashflow of several hundred million dollars on “rentals” of what most people had previously owned freehold. It also destroyed most of the potential for true innovation.  

TransAlta assumes control of most of Capital Power, Hutt Mana and South Power customers = approx 520,000 dwellings = approx one third of NZ dwellings. These communities had facilitated world leading Energy Action programme into 1400 schools communicating wise uses of resources, especially electrical, carbon and atmospheric resources. TransAlta ceases to fund programme. Programme ceases in 2000. This is understandable as it is counter to the imperatives of the Electricity Industry Reform legislation. (TransAlta– NGC/OnEnergy were major fossil fuel destroyers with significant investments in Bulk-gen electricity plant.)  

The current situation is Wellington City has now lost almost all control of its electrical potential with ownership changing hands every two/three years. Thousands of its poles became profoundly stressed and close to collapse until salvaged by Auckland people (Vector Ltd). See Photo essay. One Vector permit application to the WCC was for the replacement of 1800 poles though the WCC councillor who told me this had no idea why the poles had to be replaced! Electrical systems supporting the city’s trolley bus network are now at high risk with little back up left. The city has lost most of the advantage of its electrical potential (broadband, distributed generation, transport) and despite being blessed with outstanding geo-political assets it is now in many ways bankrupt. 

3. Footnote Examples of psychopathic behaviour.

Fuller discussion of the nature of psychopathy can be found at

The 19th Century definition of it as the behaviour of a “moral imbecile” remains helpful. It is characterised by a lack of capacity to enjoy compassion and stewardship. Enhanced manipulative behaviour for short-term gain is characteristic. This behaviour pattern tended to become more prevalent in the Bulk-gen industry after the Reforms, which is understandable as the legislation reflects and is based in a moral vacuum (Some amorphous social entity called “The Market” will act for us as our steward.) 

The ethos of the new management system is well documented and illustrated in the practices of Enron where each year 10% of the staff were laid off annually to maintain a fear factor. Similarly in NZ staff were put on short-term contracts. Examples were made of middle managers who retained their integrity and who attempted to question the lack of morality underpinning new policy. More senior managers ostracised them, refused to take calls from them for months on end, refused to acknowledge communications in which middle managers expressed concerns about threats to the public good, blamed lower level staff for problems they no longer had effective responsibility for etc. These middle managers compromised by either suppressing their concerns or leaving the industry. 

I was a just a meter reader and not exempt. I was also known to be honest and articulate. Senior managers “binned” my 25 years of exemplary work records to discredit me. They had it be known to me they would “annihilate my family legally” if I spoke out publicly about my concerns for the new industry policies and practices. I have reason to believe my sanity was made a subject of public question as managers attempted to cover their butts. Eventually after I “ceased” my employ in the industry the Employment Court ruled in 1998 that I did have a legal right to blow the whistle on new meter reading contracting systems that allowed the criminal fraternity very easy access to Wellington city’s keys/security systems. I cannot talk about the period May1996-September 1997. However I can say subsequent to this period I was repeatedly threatened that my family would be raped and worse and our family home “trashed” if I did not “keep right out of the electricity industry.” I had much reason to take the threats seriously. Our family is now broken up and the family home sold. 

It is interesting to note that all my concerns were subsequently confirmed as valid, including my concern expressed in 1996 that the TransAlta structure was so fatally flawed it must implode and could bring down our national economy with it if it persisted any period. The corporation structure collapsed in 2001 within weeks of Enron. 

4. Footnote Example of service v profit driven behaviour.

Christchurch City Council was proposing to double the number of coin prepaid meters (350>>>700) to help low income families budget. It had identified that many households were struggling in the wake of the unemployment and the 60% increase in Bulk-gen electricity tariff that occurred as a consequence of the 1979 mineral oil price spike (From memory the Hon George Gair had tacked the price of Bulk-gen electricity onto the global price of mineral oil though the likes of Comalco may have been exempt). 

As a meter reader I had the practical knowledge and was able to outline to city councillors the major flaws in the proposal and its risks for households. I also proposed an alternative scheme that addressed a central issue – very high winter bills v summer bills. I proposed the council use its intelligence of total annual consumption of a household and estimate the monthly average. The household would pay this average starting a cycle in autumn thus building a small credit. The Council would extend credit over the winter/early spring if necessary and the debt to the Council would be paid off over the summer.

The scheme was an instant success, solving many of the budgeting problems of households, reducing security risks all round and cutting MED debt management costs dramatically. Within about five years the scheme had been adopted on a national scale, including at Capital Power in Wellington, in schemes known variously as Easy Flow, Even Flow and Smooth Flow. 

The success of the scheme was because it is based on quite sophisticated knowledge and thinking that is counterintuitive to the “profit driven” ethos that now reigns. It can be summed up as “Do something as a careful service and it will profit. Attempt to profit from that service and it is cost.”  The new breed of managers that thrived in the corporatised Wellington MED-Capital Power could not understand this logic. They attempted to profit by $75000 annually by reducing meter readings from 6 to 2 readings per year for Smoothflow payment customers. 

These “cost saving” figures were based on their new contract meter reading systems i.e. a saving of $3- $5 per meter per year. Under the traditional in-house service-driven system the 4 readings actually cost under a dollar total but the new managers lacked knowledge of the industry and could not understand that. Nor did the new managers understand the value of other information meter readers used to provide – value that probably completely offset the cost of obtaining the readings. 

The increased meter reading costs were of little concern to the new managers as the Reform legislation meant they did not affect the bottom line of TransAlta (Canada). The Wellington community had no say now in the system and TransAlta could simply pass on the costs to the community. Similarly the state and accuracy of the meters and ripples were of no concern either as the Wellington community no longer had any say in its local grid or the intelligence of that grid. 

I was sufficiently concerned for the public good that I wrote a four page paper to the TransAlta managers explaining the logic of even payment systems and predicted that for every dollar saved Capital Power-TransAlta would incur two dollars costs i.e. over $150,000.  My estimate was most inaccurate! 

The first year a profit was made from the new policy. Then the impact of the destruction of intelligence hit as estimation algorithms became exponentially flawed. Households became stressed by unexpected debts. TransAtla’s new call centre, designed for 100,000 calls a year, was suddenly besieged with irate customers at a rate over twice that. The average waiting time per successive call blew out to 18 minutes and I heard reliable reports of an 80% drop-off rate. Soon TransAlta had hired 220 call operators in an attempt to cope. Even with this number I found as an employee/subcontractor I could no longer ring my company from in the field. Previously for decades my calls had always been answered in efficient and knowledgeable ways within a couple of rings using probably less than the equivalent of 50 switchboard operators, maybe even less than 30. It was clear I had underestimated the costs of attempting to profit from services by as much as 10 fold. Indeed TransAlta lost so much good will that its name became a serious liability. 

5. Footnote re “damage control” v “problem solving”.

As with many other sectors, the role of meter readers was redefined in the new corporate “profit driven” ethos.  Our work was severely devalued, we were told we were “liabilities while on the books” and that we were “history”. Thus it is not surprising that many of us got demoralised. One meter reader reacted by failing to climb the steeper streets of the eastern hills of the Hutt and simply estimated household usage. After some months and increasingly inaccurate bills the issue hit the media. To use their own words the managers went into “damage control”. They issue media statements saying the meter reader had an “eyesight problem”. They got so caught up in their own PR Spin that they ended up believing in it. As a result they had the eyesight of all the meter readers in the Wellington region checked, much to the hysterical laughter of all the many who knew the true situation. TransAlta had just released both the Hutt and Capital’s safety officers as redundant and one of them was contracted back in to check the eyes of meter readers. This person told me she had no concern for our eyes and had suggested to TransAlta she should really be checking those of the line’s workers. Managers said this was needless and so she had voluntarily provided this service and found, as suspected, five were completely colour blind. 

6 Footnote  A confluence of several great new technologies is occurring – broadband, 220 v grid communication, microwave, “smart monitoring systems (meters) and appliances and dwelling based generation of resources. 

The degree that communities  can exploit the enormous potential of this confluence determines their capacity to survive the passing the Cheap Mineral Oil/Gas era. I have devised a prototype grid rating system. It suggests New Zealand’s potential has been diminishing for twenty years now and continues to diminish.  

7 Footnote  This article is provided free to all as a public service. 
The experiences related are from no textbook and are as true to my experience as I can relate. The work is not enabled by a university sinecure or consultancy fees or media salary (commodity tax for the PR industry). The source of income enabling the article is from cleaning toilets, mopping toilet areas, vacuuming classroom carpets, emptying waste bins and sweeping school playgrounds.


SEF Posting by Molly Melhuish , consumer advocate.

Sunday, 1 March 2009 8:47 a.m.

*"Bombshell set to hit generators" *So shouts the Sunday Star-Times, on
the front page of its business section. Want to know what's inside the
bomb? This article, by Trebing, Harry M, a retired professor of
economics at Michegan State University, and founding director of the
Institute of Public Utilities, will tell you all about it.

= = =

Economic deregulation of electric and gas utilities has failed to
achieve its proposed objectives of lowering price, promoting greater
consumer choice, constraining market power, and improving infrastructure
performance. Concentration has grown, deregulated price increases exceed
prices where regulation was maintained, and supposedly free markets do
not assure control of market power or cost effectiveness in achieving
environmental protection. An agenda for re-regulation is proposed. These
reforms would continue the work of Institutional economists in the field
of public utility economics.

= = =

The article appears in html only, there is no PDF version. It was
published in the Journal of Economic Issues, June 1, 2008, and is of
course thoroughly referenced. If you get tired of clicking through it,
send me a private message and I will reply with a word file version I
have made.

It is about the effects of deregulation on prices in the various US
states, with parallels drawn to European and Australian markets. He did
not mention New Zealand. In particular he discusses the 2000 crisis in
California, which Professor Wolak of Stanford University has extensively
analysed. Wolak is the chief author of the afore-mentioned "bombshell".

So get ready for the release of the first Wolak report (the Star-Times
says another will follow dealing with retail electricity markets), and
do read this astonishingly readable journal article.

Geoff Bertram has also analysed New Zealand electricity price rises, and
their causes are essentially the same as those set out by Trebing. See


Another article by Geoff gives hope for actually proposing re-regulation
of the electricity industry. This article is not about electricity, but
about Carter Holt Harvey’s pricing for pink batts, to compete unfairly
with the cheaper and more popular wool/ polyester insulation.

That article concludes:
= = =

Are there simple policy prescriptions on how to deal with a predator
once identified? There is certainly one, which has quite a long history in the
literature. Williamson48 argued that an incumbent which responds to entry by driving down price should be prohibited from expanding into the market space created by the demise of the prey.
Baumol49 and Edlin50 argue along similar lines that a firm which lowers
its prices to drive out competitors ought to be prohibited from raising price again
after predation ends. All of these are variants on the familiar case for price-capped
incentive regulation.

In fact, once one starts thinking creatively about what regulators can
do right (rather than simply running a blanket condemnation of all regulation per se)
there are plenty of interesting options for forestalling anti-competitive predation,
provided only that Parliament is not stampeded into legislating the constructive
possibilities to death by passing vaguely-worded provisions wide open to semantic manipulation by the rentseekers of the world.

= = =

I am convinced that small-scale electricity generation is massively
suppressed by the volatility of spot prices, created by actions of New
Zealand's oligopoly of retailer-generators. This is a serious question
for sustainable energy enthusiasts, and is worthy of careful study
before Wolak's report is released.


Posting by Alastair Barnett

Monday, 2 March 2009 10:00 a.m.

Murray, We need to be careful about assigning blame here - if all each
electricity producer has done is follow their instructions to work to the
short term advantage of their shareholders (mainly government), then
condemnation is hardly appropriate.

Surely the problem is the naivety of the political agenda that the simple
removal of regulation would deliver electricity generation into the safe
(albeit invisible) hands of "the market". J.K. Galbraith spotted the flaw in
this many years ago, in that the subjective interests of the decisionmakers
in large companies do not coincide with those of the consumers, so why
should we be surprised to find that this still holds true?

Hopefully we can now return to a more pragmatic approach that when a market
need becomes obvious (such as more generation and transmission redundancy to
provide security of supply to Auckland), it can be settled by central
government direction, rather than by tinkering Electricity Commission style
to try to construct ever more complex rules to force the market model to
deliver the "right" result. To market purists, any result delivered by a
free market must be the right result!

I suggest any attempt to force the market to produce a predetermined result
makes the "free" market an oxymoron! Far better to admit this and intervene
unashamedly from time to time when rebalancing is required.


Helpful reading

Empires of Light Edison, Tesla, Westinghouse and the Race to Electrify the World by Jill Jones

Power Play - The fight to control the world's electricity  by Sharon Beder

Converge New Zealand's Online Community Network 


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