Brownlee reforms will end up costing taxpayers

Warnings today by a major ratings agency that a key aspect of the Government's proposed electricity reforms will pile costs onto taxpayers are a real concern, Labour’s Energy spokesperson Charles Chauvel says.

The warning comes in a Standard and Poors report entitled "Spotlight On New Zealand's Power Generator-Retailers: Can Weak Balance Sheets Accommodate Market Reforms And Growth Ambitions?"

In it, the ratings agency focuses on the reforms' proposal to take some hydro power lakes and stations from one SOE - Meridian and hand them to another - Genesis.

"Standard and Poors says this proposal is likely to result in the Government having to provide ‘appropriate support to the balance sheets’ of the SOEs if they are to ‘have the financial headroom to withstand the risks of transitioning to the new environment," Charles Chauvel said.

"In other words, the taxpayer will need to underwrite the cost of the transfers, and the effect they will have on the financial viability of Meridian in particular.

"This warning makes a mockery of Gerry Brownlee’s attempts to play down the impact of his plans. Standard and Poors' concerns simply echo those of the Treasury and others - that this will be costly and disruptive and without any obvious benefit.

"Taking assets from one SOE and giving them to another will simply result in Meridian losing a large number of customers, and their moving to Genesis and others. This won't result in better energy security or in lower price rises, and today's indications are that it will also require substantial taxpayer support.

"It’s not too late for Mr Brownlee to listen to the experts.

"Getting this wrong will be an expensive mistake which taxpayers and energy consumers will end up paying for," Charles Chauvel said.