KEY POINTS:
Roy Hemmingway leaves our shores having made a good fist of doing a nigh-on impossible job.
We have just got through one of the driest years on record without mishap. In the process Hemmingway, and the Electricity Commission he chaired, had to face down pressure from two of
the three State-owned generators to set aside the rules for cranking-up emergency generation when the ink on the regulations was barely dry.
He has also forced Transpower, for so long cock-of-the-walk in the electricity sector, to go away and come up with a less-expensive plan B for securing transmission into Auckland.
"Transpower's alternative analysis had not been especially thorough," he told Parliament's commerce committee in what amounted to an exit interview last week.
But the conflict between a Transpower resentful of being told how to do its job and a new commission convinced transmission alternatives had not been adequately explored tried the Government's patience to breaking point. Hemmingway is a casualty of that, as is any pretence that the commission is an independent regulator.
What he has not been able to do is overcome the fundamentally flawed governance model adopted when the commission was established.
It was set up to be independent when the Government wanted to distance itself from unpopular decisions, but to do what it was told if the political heat got too high. An arm's-length glove puppet, you might say.
"My wife looked at my contract and didn't want me to take it. 'You've got no protection', she said," Hemmingway told the MPs.
"I wouldn't recommend anyone to take the job in these circumstances."
In 2002, when legislation setting up the commission was before Parliament, former Treasury Secretary Graham Scott submitted a trenchant critique, which was backed by most of the industry.
He was particularly critical of the lack of political independence that was hardwired into the legislation.
The commission is required to "give effect to GPS [Government polls statement] objectives and outcomes".
The GPS is a wishlist of things the Minister of Energy would like to see. It gives no guidance on priorities or how to resolve conflicts or trade-offs between them.
Worse, it can be changed at the stroke of a ministerial pen.
Nor is the GPS necessarily in harmony with the electricity governance rule book, which the commission is supposed to go by. It is the fruit of the long and ultimately abortive attempt to set up self-regulation for the electricity sector.
But if the Government did not want the commission to follow the black letter of those rules, it should not have appointed an American lawyer to chair it.
"Given the highly political environment in which it must operate and the sheer scope, complexity and conflicts in its numerous roles, the commission is likely to have serious problems implementing its mandate," Scott concluded.
"Indeed it is not clear what its core mandate really is, and it seems likely it could change with some regularity at the behest of the minister."
Reflecting on the issue at his parliamentary swansong last week, Hemmingway cited several respects in which the hallmarks of an independent regulator were missing.
Commission members are appointed for relatively short terms of two or three years and can be removed without explanation.
Direction from the Government should be in statute and not in something like the GPS, which can be changed quickly.
Most of the commission's "decisions" need to be signed off by the minister.
Hemmingway, even in his relatively brief tenure, had three ministers of energy.
Pete Hodgson, who appointed him, was hands-off. Hemmingway said Hodgson always prefaced his advice with "You are free to ignore this ... ".
"Once, when we did, there were no repercussions," he said.
Then there was Trevor Mallard, who did not appear too unhappy to see the vexed issue of new pylons across the Waikato kicked to touch until after last year's general election.
"We were encouraged by Mr Mallard to look at alternatives and to consult. I never had any feeling that was because of a looming election, simply that it needed to be done."
But last May, after Transpower had persisted with its original plan and the commission had rejected it, both were called into Michael Cullen's office for a dressing down and, in effect, Hemmingway said, told to negotiate.
"I don't think that's the appropriate role of the regulator."
The same message from Energy Minister David Parker was also delivered in a way Hemmingway clearly found unnecessarily high-handed.
But Parker is unrepentant: "I make no apology for the fact that, when security of supply gets ropey, there is political accountability in New Zealand and politicians step in. And I did."
Hemmingway might have fared better if the commission had grasped the nettle of overhauling the rules for transmission pricing.
If the generators had a clearer idea of who will pay for transmission investment - or rather who will get to present the bill because, of course, it is consumers who will pay - the commission might have had some allies in the conflict with Transpower.
The effect of the banging-heads-together intervention by the Government is that there is likely to be some kind of consensual outcome on the Waikato line by Christmas (at least between Transpower and the commission; landowners are another matter).
The appearance of such a deadline seems to have more to do with winning the right to host the 2011 Rugby World Cup than anything else.
It will most likely be agreed that it should build a 220kv line capable of being upgraded later to the 400kv that Transpower believes will be needed.
That will postpone the need for investment in transformers to step the voltage up to 400kv and back down again.
But it leaves unresolved the question as to when that should be done.
Tension between a regulator and a monopoly such as Transpower is inevitable and healthy. Otherwise one or the other is just rolling over.
If the Government wants to call the shots it should have a government department with the normal governance arrangements: an act, a chief executive and a responsible minister.
If it wants a genuinely independent regulator, it has the models of the Commerce Commission or Securities Commission to emulate.
But evidently it does not.
So the next chairman or chairwoman of the Electricity Commission should not be a career civil servant, or a tough-minded watchdog type either.
Political dexterity is the key attribute - such as a former cabinet minister might possess.
It would be ironic if David Caygill, who led the process to set up a self-regulatory structure and avert the need for a regulator, should now become the regulator.
