Power subsidies an incentive to waste

RICHARD MEADOWS
Last updated 05:00 07/03/2014

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Previous attempts to stamp out energy poverty have failed and it's time for the industry to work together to help struggling families, experts say.

Contact Energy general manager of customer insight, marketing and communications Nick Robinson was one of four panellists who spoke at the Downstream energy forum in Auckland yesterday.

Robinson said the current low-user tariff for electricity was broken, and not helping those who actually needed it.

"It's kind of like . . . a perverse cross-subsidisation by the poor to the slightly wealthier," he said.

That was because the poor often had more family members living in the house, while the rich could afford to be energy efficient.

A recent report has suggested as much as a quarter of all households were in "energy poverty", spending more than 10 per cent of their income on power.

Keynote speaker Christoph Frei, secretary-general of the World Energy Council, said subsidies of any kind needed to be used with caution, as they could incentivise wasting energy.

Many countries around the world had some sort of fuel subsidies, joking that 95 per cent went towards heating rich people's swimming pools, he said.

Subsidies were easy to put in place and difficult to get rid off, Frei said.

The "million dollar question" was how to improve access to energy and energy security without increasing prices.

Frei said New Zealand was lucky to have cheaper access to renewable energy, with other possible solutions including improving energy efficiency.

Ian McChesney, co-founder of the Community Energy Action charitable trust, said he did not see energy poverty as an unresolvable issue.

A few years ago his trust began employing an energy adviser for one-off consultations.

He suggested that could be extended so needy households could get some "hand-holding" over a period of months or years.

"I would like to see the concept of a social tariff put on the table as well, one that is targeted to those in need," said McChesney.

Robinson said Contact Energy had written off $12 million of customer debt last year, with some unpaid power bills running as high as $26,000.

Part of the problem was the fear of cutting off medically dependent customers.

Robinson proposed the industry fund a centrally managed database of vulnerable customers "so we're not having to make the judgement".

He said the industry needed to collaborate. 

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- BusinessDay

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