Perspective with Andrew Dickens: We're all paying for this LNG project one way or another

So the LNG power plant is set to go ahead to protect us when renewables run low. The Government must be satisfied that the business case stacks up, because that’s what they said they would consider.

At the same time, the Government will be cracking down on power companies during dry-year shortages. Fines for failing to secure enough backup electricity could jump from $2 million to as much as $10 million, or 10 percent of turnover. That’s a hefty fine.

The Electricity Authority will also get stronger powers to monitor supply risks.

Energy Minister Simeon Brown says New Zealand’s renewable boom still needs reliable backup when hydro lakes are low and wind and solar can’t meet demand. He argues that LNG is the fastest and most practical short-term solution to avoid blackouts, soaring prices and business shutdowns during dry years.

But of course, the fly in the ointment is: who’s going to pay for it?

The Government certainly doesn’t want to. They’ve scrapped plans for a levy on power bills to fund the billion-dollar terminal. People argued that would effectively become a gas tax for consumers - and we know this Government does not want to be associated with new taxes.

So Brown says the electricity sector will instead help fund the project, with two companies now shortlisted to build it - and there's the rub.

If it’s a gentailer - if the gentailers foot the bill - they are the electricity sector. So how can the Government prevent them from passing on the cost?

It’s the same pickle they got into with the levy on banks. Nicola Willis was adamant that banks would not pass those costs on to New Zealanders. But when pressed in an interview on Q+A, she couldn’t give a reason why they wouldn’t - other than the goodness of their hearts.

The Government can’t force a private company to, you know, absorb costs within its structure.

There’s an aversion to increasing taxes but at the moment all they’re doing is passing the job on to private companies, which will - of course - factor these costs into their pricing. That includes the cost of the LNG terminal.

So call it whatever you like - the result is the same. We all end up paying for it, one way or another.

Andrew Dickens is a broadcaster with Newstalk ZB. - where this article was sourced.