Electricity Industry Reform: Neo-communism?

In New Zealand the two largest opposition parties have announced a plan to return the electricity industry back to a centralised planned model. The idea is to have one monopoly buyer  who effectively sets the price for wholesale electricity.

We had decades of centralised planning for the electricity industry and that resulted in much oversupply. Deregulating the industry, creating the spot market, introducing competition (albeit oligopolistic) have constrained energy prices.

This may seem contrary to experience but the world has seen a period of sustained energy price inflation in recent years. Yet we have seen higher electricity price rises than that experienced elsewhere. NZ has its own particular circumstances that should be taken into consideration.  For example, the exhaustion of the Maui Gas field has meant that Gas-fired generation is now fed by more expensive fields. 

I believe Electricity prices would have been higher still without market constraints.  Instead of large chunky investments in new generation, smaller increments have been installed, better matching demand growth.  NZ Windfarms, an independent power generation capacity investor based in New Zealand, bet that electricity prices would rise to levels that would sustain them. This proved false. Not surprisingly capital investment in generation has slowed.

The 20th Century (should have) taught us that centralised planned economies are poor at allocating resources. Counter-intuitively the seeming chaos of free markets has proven to be more efficient.  The painful experience of the Soviet Union, China, the Eastern Bloc and indeed modern day North Korea stand as prominent warnings for us all. Humanity lost up to 100 million lives teaching us this lesson by famine, some other form of deprivation or in the Gulags. Most Left wing thinkers I have met tend to be highly intelligent and hold above average levels of education. Can this lead to over confidence in our abilities to manage an economy? 

The biblical role of government is to regulate commerce from corruption and in this context, prevent monopolies from abusing their positions. Consequently if a part of the electricity needs immediate scrutiny from Government it should be the elements that are naturally monopolistic in nature, the electricity network companies.

For further reading:

World bank. 
Lantau Group.