Lengthy and costly legal action, with the Government footing much of the bill, would inevitably follow the introduction of the Labour-Green proposal to introduce a single buyer of electricity, Mark Warminger says.
Mr Warminger, a portfolio manager at Milford Asset Management, said the flow-on effects to New Zealand's listed power companies from the proposal would be detrimental.
The plan, according to Labour and Green analysis, would cut the nation's power bills by up to $700 million a year, lowering household power bills by up to $300 a year and giving the economy a $450 million annual boost.
''This analysis is naive and does not take into account the full direct and indirect costs.''
Milford analysis suggested that share prices for Contact Energy, TrustPower and Infratil could, on average, fall by 20%.
''This is around $1 billion loss of wealth for New Zealanders when adjusted for overseas ownership of these companies. On top of this, there will be a cut in dividends for the listed companies of, say, 20%, further reducing returns to New Zealand shareholders. This will adversely affect many KiwiSaver schemes that have direct exposure to these companies.''
The Government would also be affected by the new agency, Mr Warminger said.
New Zealand had $253 billion of external debt and each 0.01% movement in the cost of debt added $25 million in interest payments.
The uncertainty caused by the Labour-Green ''nationalisation by stealth policy'' was likely to add up to 1% to the cost of debt for New Zealand due to lenders requiring an increased return for lending to a nation with political and economic instability, he said.
The cost of capital for all New Zealand companies would rise due to the same factors. A 1% increase in debt servicing costs for New Zealand's overseas borrowing would, in time, add up to $2.5 billion a year.
In addition to higher financing costs for the economy as a whole, the Government would receive around $450 million a year less in dividends from the state-owned power companies. The state-owned power companies would need to write down asset bases by around 30% on an asset base of $15 billion, equating to $4.5 billion of capital destroyed, Mr Warminger said.
Apart from the direct financial cost, there would be high-skilled jobs lost as power companies reduced capital expenditure and development.
''In the short term, this will not be an issue while demand catches up with supply. But by the time supply and demand are in balance, it will be too late to add additional capacity in a timely manner,'' he said.
Economic Development Minister Steven Joyce has called the Labour-Green plan ''deliberate economic sabotage'' but Labour associate finance spokesman Shane Jones says the plan will provide a boost to New Zealand businesses and the economy.
''The super profits earned by power companies not only hurt Kiwi families, they are holding back New Zealand business,'' Mr Jones said.
Independent economists Business and Economic Research Ltd (Berl) said the policy would provide a $450 million boost to the economy that would create 5000 jobs.
That was just the start, he said. The reforms would cut bills to commercial and industrial users by 5% to 7%. Lower energy costs had the capacity to transform New Zealand businesses.
Mr Joyce said comments made by Labour and Green politicians showed they did not care about the damage to KiwiSaver accounts, ''mum and dad'' investors and the wider New Zealand economy.
Investment in new power generation would suffer as would wider investment in the New Zealand economy.
''Kiwis are deeply suspicious about the Labour-Greens announcement and its timing. It's simply economic sabotage,'' Mr Joyce said.
