A 647 page High Court decision last week should eventually mean a reduction in monopoly profits of up to $150m per year, to the benefit of electricity consumers. I'm proud of my firm's role in making this likely, and surprised that it may have not been recognised in relevant share prices.

We acted for the Major Electricity Users' Group in the High Court merit review of the price control methodologies announced by the Commerce Commission in 2010. Given market whining about lack of warning of the effects of monopoly price control on Chorus I'd have expected an 'efficient market' in company analysis to be keeping a close watch on the merit review decision.

 Yet the Vector price, for example, seems to have been unaffected by a decision that could cut its revenue by as much as $20-25m p.a.. Unlike the Labour scheme for nationalising the electricity generation market, this win for consumers will come from confining monopoly prices to risk defined market returns, based on orthodox principles. It would eliminate a current generosity bias to monopolists. During the consultation process on the Input Methodologies the Commerce Commission simply ignored the relevant MEUG submissions so there was not enough material in the Commission's record of expert opinion (on which the Court must rely to rewrite a methodology). Accordingly the Court limited itself to delivering a strong steer to the Commerce Commission:

(paragraph [1486]) “In reaching this decision not to amend the IM in respect of the use of the 75^th percentile for DPP/CPP regulation, we are mindful that the IMs will be reviewed. At that time, we would expect that our scepticism about using a WACC substantially higher than the mid-point, as expressed above, will be considered by the Commission. We would expect that consideration to include analysis – if practicable – of the type proposed by MEUG. We would also expect the Commission to consider MEUG’s two-tier proposal in light of our observations. We acknowledge that further analysis and experience may support the Commission’s original position. But they may not…." 

This is a very strong direction to consider our claim that there should be a mid-point WACC or an alternative 2-tier WACC.

The ComCom could review their 75^th percentile decision next year so that the reduced return on capital could apply when the price path for lines companies is reset for the period 2015 to 2020.

In the merit review proceedings on the opening day of the substantive hearing the Franks & Ogilvie team (Nikki Pender, Jordan Williams and me) faced 29 lawyers (including 6 QCs) in the body of the Court with their supporting platoons in the gallery. MEUG was there alone representing consumers. The Commission lawyers were dedicated to defending its status quo, and the others were pushing for hundreds of millions more in permitted revenue.

I've previously mentioned these proceedings here, here and here. They took more  Franks & Ogilvie hours in 2012 than anything else.  We're enormously chuffed to have such a good outcome for our clients, and eventually for all consumers.

The High Court decision is extraordinarily assured and direct, despite the Judge's open acknowledgement in the early stages of the hearing that he was having to learn the arcane mysteries of cutting edge corporate finance. He was assisted by two experienced economic regulators from Australia. We think the merit review process could be improved to reduce the burden on the Court, but the decision shows the intellectual quality of good adjudicators.

Nevertheless I'll blog in future posts on some of the lessons for me of re-exposure to our courts after 30 years of strenuously keeping my clients as far away from them as possible. In my opinion they are immeasurably worse overall for litigants, and much more indulgent to lawyers' pretensions.. This is not within the power of even an outstanding High Court judge to control. It could be remedied only by a dedicated reform-minded Supreme Court.

Grasshopper Rock wine company has great email advertising, and great wine.

Today's message shows the right kind of sophistication:

"If you watch too much television, you won't be amazed by what is now described as iconic. Recently, we have seen Air New Zealand identified as iconic, a director describe an "iconic part of my life", Piha is an iconic west coast beach, Christchurch has restored its iconic tram, the A380 is Europe's iconic double decker jet, an actress enjoyed playing an "iconic Kiwi war hero", in Auckland the council is moving an iconic seat from in front of the library, and Alexandra has an iconic pie cart.

Let's run that again, using the most common synonyms from Roget's Thesaurus. Recently, we have seen Air New Zealand identified as important, a director describe "an important part of my life", Piha is a representative west coast beach, Christchurch has restored its historic tram, the A380 is Europe's ideal double decker jet, an actress enjoyed playing an "important Kiwi war hero", in Auckland the council is moving an historic seat from in front of the library, and Alexandra has a burnt out pie cart.

By using iconic, we can remove up to 20 common words from the English language, which TVNZ is doing on a daily basis.

Is Grasshopper Rock iconic? Or perhaps an icon? Too early for us to judge, but you can be iconic by celebrating that historic event, Christmas, in traditional fashion by, choosing the ideal wine, made in a classical style, and representative of the Alexandra sub region. And that's important."

They deserve to sell their wine for $330 per case.

I'm surprised by the comprehensive acknowledgment of fault by the Auditor General, but not by its existence. We looked closely at this situation at the request of Colin Craig, among others.

In our opinion the ratepayers had a strong case to compel the government to meet a substantial part of the costs otherwise falling on Kaipara ratepayers. But the group we advised did not proceed with their action when a Mangawhai based group launched in court. For reasons that escape us but which may some day be explained, the legal actions have focussed largely away from where the money might come. We've never seen the point of seeking declarations of the obvious – including the invalidities that Parliament is currently remedying.

Now it may be too late to seek more effective remedies, but in our opinion the Auditor General protests too much when she says that the Audit Office defaults were not causative because the damage was done.

"I have acknowledged that, with the benefit of hindsight, it would have been

appropriate to reconsider the situation more fully in late 2011, in light of the renewed correspondence from ratepayers and the additional information emerging from KDC. If we had done so, this inquiry might have begun a few months earlier.

However, that would not have changed what happened, because the wastewater scheme was already built and operating. An inquiry cannot undo the cumulative results of years of poor decision-making.

None of our reservations about Kaipara ratepayer tactics detract from recognition that this is a stunning vindication of several determined Kaipara people, and in particular of whistle-blower Clive Boonham.

Instead of snarling at the incompetent office-holders of the Kaipara District Council the Audit Office watch-dogs were inside fawning on them.  How secure are our traditions of incorruptibility, and accountability, when the watchers are asleep or lickspittles?

Today's Herald leader supports Cam Slater's entitlement to be regarded as a media person. It is welcome, and correct as far as it goes.

The editorial summarises the Law Commission on who should get its proposed regulated media toady's privilege.against being ordered to disclose sources:

"The Law Commission's definition…had four elements: the publication of news, information and opinion of current value; its dissemination to a public audience; publication must be regular; and the publisher must be accountable to a code of ethics and a complaint process."

Without actually saying it simply, the editorial highlights the flaw in the Law Commission's scheme to replace defamation with regulation as the main protection against the abuse of free speech.

The only speech that needs constitutional protection is speech  that upsets, that will be labelled 'inappropriate' or 'unacceptable' or 'offensive' by targets who would have the power to suppress it if they could. No one will bother to try to suppress Inoffensive speech.

The powerful and the comfortable (the establishment) will always find ways to frame codes of procedure or ethics in ways that enable them to rule. Think, for example, of how specialist rulers have siezed employment law to second guess and oppress humble employers. In a simple assertion of power because they can, the employment law insiders mulct lay employers for flaws in procedure. Dismissing the impracticality of 'best practice' they force employers to reward dishonest and lazy and incompetent workers for their failings. Employment law system insiders delight in telling bosses and workers that lies and disloyalty and bad faith in offending employees are irrelevant if the boss has not jumped through the right procedural hoops.

Perhaps he was misquoted, but it is odd that.Steven Price, as reported in the Herald seems unconcerned by the grave threat in the Law Commission approach. He noted about it:

"Still, it is concerned that the reporting be dispassionate and reliable. It can be argued that Whale Oil doesn't measure up on that criterion."

Free speech that is obliged to be 'dispassionate' and 'reliable' in the eyes of the establishment is not free speech at all. The free speakers who made the differences in our history, in our civilisation, were passionate. They were often hated by the majority. They often lacked the resources and the temperament to shut up till they had satisfied some ruler's standard of verification and compliance with prevailing norms of inoffensiveness.

On the other hand, I'm dubious about the basis for the privilege against disclosure of sources. The right of free speech is the right of every one of us. Confined to a privileged media class, given full strength only where it meets some establishment measure of 'balance' it would become another means of coercion to consensus.

The court should have ruled that whether Mr Slater was malicious in his publication of the relevant material did not need disclosure of sources, and avoided expanding the so-called news media privilege.

The free speech horse has bolted anyway. The officials of the Orwellian Human Rights Review Tribunal, and the Privacy Commissioner have driven it into the far paddock. When these enemies of basic human rights punish people for telling the unwelcome truth about others, the hard won limitations of defamation have gone, and free speech has been neutered.

Sir Roderick Deane's website reflects on corporate governance.

He notes that our top companies face political and regulatory risks that may dwarf their normal business risks:

"Think of how many companies face actual or implied political regulatory threats today and you will encompass many of the top companies in New Zealand: Meridian, Mighty River, Contact, Genesis, Telecom, Vodafone, Chorus, Sky City, Sky TV, Auckland International Airport, Fletcher Building, and so the list goes on. Their directors live in a world that is hugely demanding commercially without the need for all the additional and burdensome regulatory uncertainty".

Commentators ooze smug criticism of directors who accept appointments to boards without specialist expertise in the relevant lines of business. They howl for the blood of directors caught short for lack of understanding of arcane accounting points. Yet most of these top companies, which now sadly may require political sensitivity as much as business 'excellence', leave themselves without instinctive appreciation of it. There is no substitute for experience at the sharp end of voters' conflicting demands and expectations. Knowing how those pressures are likely to be reconciled with reason and duty requires the judgment of Gladwell's 10,000 hours.

In my experience most big company directors feel they can, or will be able to schmooze politicians when necessary. But their body language gives them away. From experience I think they feel superior in abstract to most politicians, morally and intellectually. They are indifferent to very senior public servants who could supply the same insights.

 In reality directors and senior executives alternate between obsequious greasing, and letting slip their underlying contempt. Some can hardly bear the company of politicians.

For a sample of the popular attitude, recall the gleeful vilification in comments on Lombard directors Sir Douglas Graham and Bill Jeffries, and the criticism of Dame Jenny Shipley's role for Genesis.

The political and regulatory risks have crystallised for Chorus, A respected analyst tells me all the equity of that company has gone, for the present. If so they've lost far more than Lombard.

Yet the shareholders of Chorus entrusted their wealth to a board bereft of anyone with an insider experience of democracy. A company with such political and regulatory exposure should have a former minister on the board. There is not even a  former senior official, or parliamentarian to ensure the board grasps the realities of politics and not some group stereotype.

I do not blame the Chorus directors for this gap. The Telecom board was similarly bereft when the Cunliffe bomb hit them seven years ago. Most of the companies listed by Sir Roderick are no better equipped.

The IOD and the senior director network are terribly anxious to show themselves respectable on 'diversity' and opportunity and training and evaluation.

They've lost sight of what I think Sir Roderick was saying in his paper – that directors should be people who watch and speak with the natural mana of experience, of having done their 10,000 hours, of having walked in the shoes of management.and made mistakes, but shown their worth by results.

Instead our board tables are carefully put together like dinner parties, designed to show interesting diversity, making sure the mix would photograph well, but above all excluding anyone who might be tough enough and uncouth enough to make the rest uncomfortable.

Our Companies Registry was a marvel of user-friendly digitalisation. But I feel sorry for the public service geni who created it. Their good work has been undone, buried inside the e-govt monstrosity.

I do not know how many wasted hours have gone into trying to communicate on the emissions trading unit registration scheme. And I've gone back to paper rather than try again to remember all that is needed for infrequent use of the IRD's horrible system.

But for years I've felt good each time a Companies Office annual return was filed, knowing that it was more simple, reliable and cheap than was possible in any other country.

But now it too appears to have fallen victim to the National government's policy of strangling any successful independent official  initiative inside amalgamated super bureacracies.

First I had to create a new identity when something called 'Realme' would not accept any of the names or email addresses I'm likely to have used previously. It told me my street address does not exist, then showed it all to me, presumably taken from some old record

Then the new me (with identical details to the old me) has to provide direct debit details to pay for compulsory 'services' (filing the annual return) that I have not asked for and find no value in. After that I must get permission from the Registrar to file the same confirmations that the old me could have filed. But that could take days, the system told me.

If New Zealand some day experiences a version of the Alfred P. Murrah Federal Building bombing in Oklahoma, it will be absolutely deplorable, but I'll wonder whether it was someone driven mad by the time wasted in being forced repeatedly through procedures supposed to simplify, but which actually complicate, do not work if you forget your password, and do nothing to make any boat go faster.

A "left wing trendy inner city hipster windbag" I think I've never met offered me on Sunday  as a mental image of mean-spiritedness. In a trivial piece on MPs remuneration comes a gratuitous jibe:

"Leaving aside the rich irony of an MP being involved in a "loyalty scheme" to begin with, this petty penny-pinching makes them look like a bunch of coupon clippers. And somehow it's all too easy to imagine Stephen Franks standing at the supermarket checkout insisting that the number of stamps he has amassed qualifies him for the dessert spoons, not the teaspoons. Or Annette King at the petrol pump, rifling through her handbag to find she has the receipt that will give her 4c a litre off."

I'm hurt. I'd rather hoped that a bearded envious lefty in a sunset occupation would miserably imagine me leaving supermarket shopping to the help.  And worried too. Is Cathy letting us down? I've not seen any new free dessert spoons or teaspoons coming home. Are these stamps only in the Herald, for poor people?

But I should not stereotype. He goes on to make a suggestion I'd love to see implemented.

"A lot of people outside politics who do get high salaries are judged on their performance and get paid according to how much money they create for their enterprises and shareholders. Imagine if MPs had to prove they had provided an economic benefit to the country before receiving any kind of bonus…."

I'd favour having a substantial chunk of income as bonus at risk. It should favour results over a term longer than the Parliamentary term. For example it could be in a deferred payment scheme so that it depends on GDP growth or some better measure of well-being in the decade after your year's endeavour.

However I suspect that my stereotyping of the columnist is less misleading than his of me. In fact I donated most of my airpoints  to good causes after I left Parliament. Garth McVicar was helped around the country by mine.

On the other hand  the spittle swamp of prejudice and mis-information in which the columnist hides his nuggets (such as support for performance pay for politicians) is circumstantial evidence supporting my stereotyping..

Julie Ann Genter MP last night won over the LEANZ audience, Most turned up cautiously sceptical, expecting perhaps at best some nuggets amongst a lot of green faith.

Instead we got one of the best presentations I've seen. Genter won over the audience with a lively, fact filled, economically sophisticated argument for abolishing the power of local authorities to impose minimum or maximum parking space requirements on specific site uses. Her case could be summarised as proving why the best plan for private land parking may be no plan.

The conditions – among them that management of publicly owned parking be sophisticated and directed to maximising the value of the land concerned did not raise hackles.

If you get a chance, go along to hear the Green MP who is not there to tell people how they should get to work or use their land.

It did not hurt that she has mastered Prezi

I'm looking forward to tthis evening's LEANZ meeting.* Green Party MP Julie Anne Genter is arguing against mandatory parking space as a condition of resource consents.

Proposing that local authorities should get out of regulating anything is interesting for a Green, given that they are defined by wanting to regulate. In practice they almost invariably prefer the monocultures of prescriptive regulation, over the competitive 'chaos' of pemissive diversity .

Originally from the United States, Ms Genter came to New Zealand in 2006 and completed a Masters in Planning Practice with first class honours at the University of Auckland.

If her position is what I expect, I'll be strongly agreeing that parking space requirements are an unwarranted tax on development, increasing housing costs and imposing on neighbourhoods the externalities of tarmac acres that could otherwise be used more intensively (and attractively).

By reducing competition for street parking, Councils can charge less to price ration it. Mandatory off-street parking subsidises car ownership at the expense of non-car owners, and at the expense of would-be home builders. If street parking is price rationed developers will make efficient decisions to provide off street parking at a level that matches demand.

Current stipulations also reduce the efficiency gains from public transport networks, though I hope Julie Anne does not confine herself to public transport because the Greens are soo boring on that.

Anti-Brown Auckland Councillor hostility to reduction in off-street parking stipulations earlier this year was just one of a number of areas in which Auckland 'drys' have turned into wets, to oppose Brown.

*Sorry – the 'next meeting notice' is out of date.

Paul Johnson’s Socrates was my first taste of his work in a series of potted ‘Eminent Lives’. It whetted the appetite for biography-lite. They are a perfect length for their explicit purpose – inspiration.
The Washington book is even more accessible. It fits perfectly one morning’s insomnia. I now want to read more of Washington’s reflections directly, on governing and constitutions.

Johnson’s work is long enough to set out extraordinary facts (for example, at age 17 leader of a survey party in dangerous territory, by 22 years commander of soldiers that fired the shots that started Britain’s first world wide war with France) but not long enough to get bogged down in recounting or rebutting all the detail of controversies.

Johnson’s writing makes learning effortless. And with his vast perspective he spares us the modern moralising that passes for warts and all biography. There is reference to controversies. For example we learn about the slave owning that tortured Washington’s conscience and exceeded even his capacity to find a way through the policy dilemma. We get a sense of what is likely to engross professional historians, but Johnson largely spares us the ritual apologies or condemnations of the modern academic for the gaps between the subject’s moral universe and today’s pieties.

And it is inspiring (if one can overcome the humbling).