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Thursday, April 25, 2013

Murray Kerr on MRP

Between 1996 and 2004 I worked as a controller in the electricity industry. I was involved in the setting up of the electricity market. When the market was being set up, I was of the opinion that it was just a method of indirectly taxing the people that already owned the assets.

My parents' generation paid for these assets to be built. The politicians have now "sold" them back to the taxpayer that already owned them.

The market has many faults, the greatest of which is that a generation company entering a bid for the supply of electricity at a low bid is finally paid the top bid for the electricity he has supplied to the market. This is unlike any other auction process I know of.

I have personally seen incidents where a generation company has spilled water at a hydro station to force a thermal station to generate. It was more profitable to do this than it was to generate using the cheap hydro energy.

The market is not working, we are too small as a country to have an efficient market.

I was going to buy MRP shares as I am a good Tory and could see a dollar to be made out of the way the market works.

The Labour policy will remove the ability of power companies to gouge the market as the consumer will be purchasing within the market as a bulk consumer.

This policy will make the market less profitable for the generation companies.

As a consequence of this policy I will now not be buying MRP shares as the profit margins will not be there.

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