Mike's Minute: The ComCom Transpower decision is madness

The Mike Hosking Breakfast

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22h ago 2:05

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It's ironic that we mention the Commerce Commission yesterday and here we are today, indulging in a bit more of its madness.

Lines charges, the cost of getting power to your house, is going to get more expensive.

Your bill will rise for the next handful of years by up to $85. That’s over $1,000 a year.

Is your power better? No.

Do you get more power? No.

You just pay more. Why?

Because the Commerce Commission decided they are going to let Transpower and local lines companies charge more so they can invest in new infrastructure.

They will be allowed to raise just shy of $6 billion.

There are a few ironies with this:

1) We also, says the Commission, understand the importance of incentivising business to invest and improve and meet consumer demands. What?! You don’t think they would charge this and more if they could?

And what incentive? Transpower are a monopoly. They have no incentive to improve anything.

2) The $6 billion is way more than it should be. What should it be? Under $3 billion.

Why? Because 55% of what Transpower is doing is because of higher inflation and interest rates. And what is 55% of $6 billion, roughly?

Now, how did we get those? That’s right - Adrian Orr.

If you want yet another tangible example, as the Labour Government and Adrian Orr years of incompetence roll on, then here you are. $3 billion worth, that is for nothing other than admin and fees.

Stuff that should not have happened if the approach in Covid hadn't been as grandiose and wasteful and plain idiotic.

More inflation than we ever needed, leading of course to interest rates we shouldn't have had to try and bring back to Earth, entirely as a result of the Covid approach that crippled the country.

Yes, there are plenty of intangibles like morals, behaviours, mental health and school attendance. But we are also paying Transpower $6 billion to do what they should have done anyway.

Awesome economics in an awesome economy.

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