KEY POINTS:
The towel rail has me in trouble again, I think. This happened last time the Southern Lakes were low.
This time I was going to lie low, but when TVNZ's Agenda host Rawdon Christie asked in the wind-up of last Sunday's programme whether my rail was off, I
admitted it wasn't.
Now the producer has relayed an email from Danna Glendining in Hamilton who says, "Tell John to turn his towel rail on first thing in the morning and the towels warm up quite quickly." I imagine this is the kindest thought the admission has inspired.
But then, I wasn't feeling very kindly towards the conservation panic last week when looking after my frail father while he hobbled around his house on a repaired foot and I found his rail off. It's just politics, I should have told him, it would all be forgotten this time next week.
There was rain in the catchments within a few days and we haven't heard any more of the crisis since. With luck we might be spared another of these primitive power-saving campaigns, but we should be well past them by now. Electricity prices have been set by the forces of supply and demand on functioning markets for about 10 years and the power bill is a much more reliable source of conservation information.
Residential supplies are shielded from fluctuations by fairly long contracts and hydro shortages are felt first by those, mostly large industrial consumers, who find it worth their while to buy some of their supply on the half-hourly spot market.
I guess they get the benefit of off-peak price dips when the dams are full, and when a dry spell arrives we all benefit from the savings they're in the best position to make. They have the resources and scale to cut production or keep alternative supplies at hand, whichever is more economic.
That is how it works; the big consumers don't cut their consumption until their power bill tells them to, and nor should the rest of us. Naturally they let us hear their pain to help drive a household conservation campaign that might reduce their costs. And residential power suppliers are just as keen to run the campaign, especially if their wholesale contracts might expire before the spring thaw.
But when they have reason to be seriously worried it will be evident in their bills. We would get notice of price rises and financial incentives to turn off more than towel rails.
More than likely there will never be a need. Increased thermal generation normally takes up the winter load, and its higher cost is transmitted through spot prices to the consumers best able to absorb or adjust to it. Economists call it efficiency.
The economy has precious few adherents when an essential service encounters some stress. Politicians love a crisis if it can be blamed on their opponents. When it's about electricity, Labour and National each think they can blame the other, National for setting up a market, Labour for having had nine years to do something else.
Even business lobbyists who ought to know the meaning of economic efficiency pretend the market is failing when prices rise. They say they need "certainty of supply", by which they mean certainty at constant prices.
Certainty of water supply built a $50 million pipeline from the Waikato River to rainy Auckland. Economists call that waste. Certainty of the power supply means an Electricity Commission set up by the present Government after the last dry summer sent spot prices too high for political comfort.
The commission was supposed to ensure the system had "reserve capacity", which it already had. It probably has less now. Climate-change restrictions have killed some scheduled thermal stations and even "sustainable" windfarms and hydro schemes are struggling to get resource consents.
A combination of computer-age demand and environmentally restricted supply is bound to put power prices into sustained ascent. Be thankful there is not the futures market here for electricity that there is globally for oil.
Analysts say the recent flood of investment into future oil-supply contracts has driven the price of fuel yet to be produced higher than its spot price. At that rate it must pay producers to leave it in the ground. No wonder the price of that commodity has been rocketing at the pumps.
The electricity spot market is often suspected of suffering a similar sort of "gaming". It can pay suppliers to hold back power because prices for the next half-hour are set by the last unit supplied. That probably happens but in a haphazard rather than organised way.
The market's marginal imperfections are minor compared with the damage that can be done to the economy by excessive public investment, the all-too-likely result of premature conservation campaigns promoting needless anxiety for political gain.
In the circumstances, turning on the towel rail was a moral act.
