UPDATED: Power policy tantamount to 'capital destruction'

The battle lines have been well and truly drawn in the wake of Labour and the Greens' power policy, which would set up NZ Power, a national electricity-buying agency they say would save hundreds of dollars a year on power bills.

The battle lines have been well and truly drawn in the wake of Labour and the Greens' power policy, which would set up NZ Power, a national electricity-buying agency they say would save hundreds of dollars a year on power bills.

The latest blow: an open letter to both parties from the heads of 10 business organisations slamming the concept as "capital destruction" with potential for a "chilling" effect on the economy. Read it below:

They've asked for the withdrawal of the plan and offered to work together on "increasing public understanding of the operation of the electricity market". Signatories include Phil O'Reilly of BuzinessNZ, Catherine Beard of Manufacturing NZ and Kim Campbell of the EMA.

The Greens are making no apologies, however.

“We will not be acquiescing to Business New Zealand’s demand that we withdraw this popular plan,” co-leader Metiria Turei said.

“The Greens make no apologies for wanting to get power prices down to a fair level. Business New Zealand and National seem to think that electricity companies’ profits matter more than lower power bills for families and businesses.

“It’s important to note that the firms that Business New Zealand is supposed to represent will benefit from this plan. NZ Power will reduce electricity costs to business by around $200m a year, allowing them to expand and hire more people. That’s why groups like the Manufacturers and Exporters Association have come out in support of our plan."

In the Herald, Liam Dann points out that either we pay as we go or we pay later. Power stations cost, after all.

"We'd all like lower power prices. It's a clever election bribe. But if a government bludgeons down the returns available to international investors they simply won't invest, they'll go elsewhere.

"New Zealand taxpayers in the future - my kids - will have to earn or borrow the money to pay for new power generation as the population grows."

And Idealog contributor/biz consultant Lance Wiggs has outlined 10 alternative suggestions for shaking up our electricity industry on his blog.

But as the seasoned Rob O'Neill and Pattrick Smellie both point out, whether you're for or against the policy, Labour and the Greens have changed the game.

Here's O'Neill: "Say what you like about the Labour and Green parties' new electricity markets policy, you can't deny it's bold. Politically, at one stroke, it makes the Opposition relevant, a player rather than a critic."

And Smellie: "Whether you hate or love their electricity policy, Labour has achieved several useful objectives this week.

"First, it's demonstrated unity with, but leadership of, the Greens. They look more like a credible government in waiting than they did a week ago.

"Secondly, they've sabotaged the politically unpopular MRP float and poisioned it for a lot of retail and institutional investors, who just decided not to buy. A week ago, when fears about the Tiwai Point smelter contract renewal were the issue, a lower issue price looked like a reason to buy MRP shares with your ears pinned back. Now, it's not so clear.

"Thirdly, and crucially, Labour has changed the conversation. Oppositions crave that attention."