The words of NZ First deputy leader Shane Jones, who said “gentailers exist for net profit after tax” and “we’re fools to think they are going to deliver on energy security”, had likely resonated with the frustrated and anxious public.
Many watching closely would have been scrutinising any announcement through that lens.
It was notable, then, that the Government chose to reject two major recommendations put forward in the report led by global consultancy firm Frontier Economics.
The first was establishing a new entity with responsibility for securing and selling thermal fuel, while the other was divesting the Government’s shareholding in the gentailers.
When speaking to the Herald, Watts pointed to separate peer reviews the Government had also commissioned, which gave different perspectives.
What the Government did do was write to gentailers to assure them capital was available for investment, start a procurement process for a new liquified natural gas (LNG) import facility, and ask for more information.
It was not the gentailers, who adjust their prices based on the conditions, that needed reassurance.
It was the public, who doesn’t get a say when supply constraints spike the power bill, who really needed reassurance.
The Herald’s Mood of the Boardroom saw energy price increases rated the most pressing concern by business leaders, with the security of energy supply not far behind.
The Herald also exclusively obtained Curia poll results that showed most New Zealanders supported the Government underwriting the cost of new electricity generation if it helps to bring down prices, while many supported splitting up the gentailers.
Issuing a formal “Request for Information” to the industry about how the Government can work in partnership with it after the months-long review, and more than a year on from the 2024 winter power crisis that spurred it, appears to be too little, too late.
Megan Woods, Labour’s spokeswoman for energy, pointed out the Government “could have cracked on” with these things during the first “dry winter” without the review.
Economic Growth Minister Nicola Willis told the Herald that gentailers hadn’t reached out to the Government previously to ask about capital.
That comment does beg the question – why did neither the industry nor this Government reach out to one another over the last year and a half?
To the Government’s credit, starting the LNG import facility procurement is a tangible action that could eventually help manage dry years in the energy supply.
The assurance that government capital will be available for new investment in energy generation is important too, as increased investment is a necessary step on the path to Aotearoa’s energy security, as pointed out in the report.
However, it is also worth noting that the reason Frontier suggested divestiture of the Government’s shareholding in the gentailers was because the report writers believed the Government would be unable to manage the budget implications of providing equity injections into large-scale new investments.
If true, it leaves a question mark over the Government’s assurance. Can it really make enough capital available to address the issue?
It is not enough for Minister Watts to say some changes would have “an immediate effect” when asked if Kiwi households would see lower power costs. Consumers need, and deserve, more clarity on an issue that affects nearly every New Zealander.
