Economist argues power-price case

Press, 23 November 1988, Page 6

Economist argues power-price case

The man asked to head a taskforce to put the South Island’s case for lower power prices says the whole island would benefit from electricity prices being tagged to the cost of plyMr Philip Donnelly, a regional economist with the Canterbury United Council, has been asked by the South Island Local Bodies’ Association to prepare a report on powerpricing. The association will ask

the United Council to free Mr Donnelly to complete the study, an update of a 1985 study by the association and the Canterbury and Otago-Southland Manufacturers’ Association. The economist said yesterday that the whole South Island stood to benefit if power-pricing was restructured to reflect the cost of supply. Some areas and some consumers would benefit more than others but the whole island should bene-

fit. The present structure was that of a monopoly exercising price control. If a market-determined price was allowed, the “glut” of electricity capacity in the South Island would be absorbed by new industry, he predicted. Rather than water going over spillways, it would be put through the turbines of South Island power plants, which would run at capacity, Mr Donnelly said.