Briefly in Aotearoa’s political economy on Tuesday, February 10:

* The Lead: The Government announced last night it planned to levy each household $15-30 per year to pay for a $1 billion-plus LNG import terminal and reduce the risk of massive price spikes during a dry year, saying this would reduce future wholesale prices by up to five times as much, which it expected gentailers to pass on to consumers. Paying subscribers can see more detail below the paywall fold and hear more analysis in the podcast above.

* The Sidebar: However, the Government chose not to compare this LNG import option against investing the same amount in solar panels and batteries to allow the hydro lakes to be used as storage, choosing instead to only compare LNG against new coal and diesel ‘peaker’ plants. It’s also choosing to pay for the LNG terminal through a type of hire-purchase ‘lease’ agreement that increases the $1 billion up-front cost to $2.7 billion over the 15-year life of the facility, even though it may never be used if there is no dry year.

* Question for the minister: Why not choose to spend that $2.7 billion on grid-scale and residential solar panel and battery installations that would now create four Lake Benmores’ worth of storage and generation, which would be enough to power over 2.5 million homes?

* Chart of the Day: Climate scientist James Hansen has predicted record high temperatures in 2026 and 2027 because of another El Niño, which he says indicates climate warming of two degrees celsius by the mid 2030s, a decade earlier than expected.

* Scoop of the Day: Andrea Vance reports this morning for The Post-$ that the Public Service is paying out millions each year in settlements of bullying, harassment and discrimination complaints that allow agencies to keep the cases secret.

* Today’s Deep-dive of the Day is from Amanda Gillies for RNZ/Newsroom’s The Detail on how Government policies scuppered a surge in imports of electric vehicles.

Join us as a paying subscriber to get more analysis and detail below the paywall fold and in the podcast above. Paying subscribers can also comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.

Why not spend $2.7b on solar & batteries instead?

Being in Government is all about making choices, hopefully buying the most public good for the least public cost.

Last night’s decision to go ahead with an LNG re-gasification plant in Taranaki was another case of ignoring the cheapest and best option in cost-of-living, current account deficit, energy resilience and climate emissions terms.

The Government announced last night it had ordered a $1 billion-plus LNG import and re-gasification facility in Taranaki, paid for through an annual lease of up to $180 million per year, or $2.7 billion over the 15-year life of the facility.

The Government said this cost to insure against a ‘dry year’ would be paid for by consumers through a $2-$4 per MW/hr electricity ‘levy,’ which equates to a cost per average household of about $15-30 per year. It said this would ‘save’ households around $50 per home per year because it expected the ‘insurance’ of having certain gas supplies would lower future wholesale power costs by around $10/MWhr, assuming power companies passed that on to consumers.

But the decision didn’t include the option of using that $2.7 billion up-front to pay for grid-scale, residential and commercial solar panel and battery capacity that would allow the lakes to remain full in a dry year. That amount would buy the equivalent of 2 Gigawatts worth of generation and storage, which is the equivalent of about four Benmore Dams worth and enough to power 2.5 million households for a year.

Instead, the LNG terminal may never be used but will have to be paid for annually, and the benefits in the counterfactual put forward by the Government in its fact sheet are dependent on lower wholesale prices (than would otherwise be the case) being passed on by gentailers to consumers.

When is a levy a tax?

The announcement was attacked from both the left and the right for being an unnecessary ‘tax’ that would increase living costs for households, while also keeping New Zealand reliant on foreign fossil fuels and paying out hundreds of millions per year in foreign currency for electricity production.

PM Christopher Luxon was forced to defend the decision as a tax, shortly after Minister Simon Watts portrayed the decision as a move to lower power costs (than would otherwise be the case.

“This is not a tax, it’s a levy. It is a levy to fund a key piece of infrastructure.

“There are a series of things that we have to do to make sure that we have the supply in place, so that we get the low year risk down, so that we can keep stabilised prices for the consumer.” PM Christopher Luxon

Opposition Leader Chris Hipkins described the levy as a ‘gas tax’ and ‘another kick for households’ cost of living.

“Power bills are likely to continue to keep going up. $1 billion would buy you a hell of a lot of solar panels and batteries, which would save households a significant amount of money,” Labour Leader Chris Hipkins to reporters.

The Taxpayers Union also described the levy as a tax.

“You don’t make electricity bills cheaper by taxing them. Dancing on the head of a pin over what is a tax and what is a levy is a Labour Party talking point. Luxon should spare us the spin and abandon this folly.” Taxpayers’ Union spokesman James Ross via statement.

‘Choosing a fuel that costs twice as much’

Renewable energy campaigners also criticized the decision, including 350 Aotearoa co-director Alva Feldmeir and Rewiring Aotearoa CEO Mike Casey. Feldmeir said LNG-generated electricity was double the price of new renewable electricity, and embedded the risk of New Zealand importing international gas price shocks, such as the one that doubled gas prices after Russia’s invasion of Ukraine.

“Essentially, what they’re doing now is putting a new tax on every New Zealander’s power bill to subsidise an expensive sunset industry.

“This is a political choice this government is making. They’d rather kowtow to the fossil fuel and the gas lobbies and keep us hooked on gas for longer, than explore how we’re going to get off it, and how we’re going to make some tough decisions in the next few months and years.” 350 Aotearoa co-director Alva Feldmeir via a statement

Casey said the Government couldn’t create cheap electricity with expensive fuel.

“The Government is basically forcing New Zealanders to invest in an LNG terminal and hoping prices might go down eventually. You cannot make cheap electricity with expensive fuels and LNG is one of the most expensive fuels there is. We don’t like burning Indonesian coal. So why replace it with expensive Australian gas? This decision just locks us into another expensive overseas dependency.” Rewiring Aotearoa CEO Mike Casey via a statement

Chart of the day: Ready for 2 degrees C warmer by 2040?

Climate scientist says 2 degrees of warming likely 10 years earlier

Picks n’ Mixes

Scoops & News breaking this morning

* Tom Pullar-Strecker for The Post-$: Electricity Authority staff breached guidelines accepting dinners from Meridian’ The watchdog says it has reimbursed the power firm and reminded staff of their obligations under its gifts and koha guidelines.’

* Thomas Coughlan for NZ Herald-$: Trade Minister standing by India FTA claims as others point out contradictions

* Tony Wall for Stuff: Bank sells pensioner’s home, demands he leave

News elsewhere in the last 24 hours

Politics & the economy

* Danyl McLauchlan for The Listener-$ (gift): There are pathways to government for Labour but will it be in any shape to govern?

* Column by Joel Maxwell for Stuff: He’s shaping up as kingmaker again, but I think Peters and NZ First have never been weaker

* Analysis by Nik Dirga for RNZ: How fake NZ news pages are swamping Facebook with AI slop

Housing, infrastructure & councils

* Bernard Orsman for NZ Herald: ‘Reasonable investment certainty’: Industry urges clarity on Auckland housing rules

* Deep-dive by Shanti Mathias for The Spinoff: Is 2026 the year New Zealand councils crack down on Airbnb operators?

* Jonathan Milne for Newsroom Pro-$: Cash-strapped Clutha resorts to a little Think Big

* Column by Hayden Donnell for The Spinoff: ‘Let’s not screw up our train system just as it’s getting good’

Poverty, health, living costs, incomes & education

* Nicholas Jones for Stuff: Why public access to a life-changing cancer treatment is ‘on a knife edge’ ‘A game-changing cancer treatment could be available in the NZ health system as early as next year, experts say - but only if health officials approve special support.’

* Deep-dive by Venetia Sherson for The Spinoff: NZ emergency rooms: No place for old men (or women)

* Kim Baker Wilson for RNZ: ‘Cascade of errors’: Man died after St John ambulance delays, coroner finds

* Dr Andrew Dickson via his substack: Lucky vs. Unlucky: The Election-Year Question New Zealand Refuses to Ask ‘We have built a system where a child’s quality of life depends on a lawyer’s ability to prove the impossible. It’s time to move from a cause-based system to a needs-based one.’

* Dr Bex via her substack: A radically different approach is needed to address material deprivation and grinding poverty ‘Substantial increases in income and/or direct supports for households with disabled people are needed to address the higher levels of material deprivation experienced by these households.’

* RNZ’s Nine to Noon: Call to levy services to keep financial mentor sector viable

* Op-Ed by Hinemoa Elder for The Post-$: NZ’s meth crisis is growing — and we’re underfunding the fix

Climate & environment

* NZ Herald: Could your home become uninsurable, unbankable and worthless?

* Bloomberg-$ (gift): Climate Risk Threatens Credit Ratings for Dozens of Countries

* AP: Olympic town warms up as climate change puts Winter Games on thin ice

Cartoon of the Day: A tragedy of our horizon

Ka kite ano,

Bernard

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