READER REPORT:

'Energy poverty' a reality for Kiwis

MURRAY WARD
Last updated 05:00 17/02/2014

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In the article, Academic attacks electricity report, Dr Geoff Bertram calls the Electricity Authority report that said New Zealand consumers were not being overcharged for electricity "extremely political".

This seems to always be the case when the price of electricity in New Zealand is debated.

Defenders of the market-based approach to the electricity sector used here for decades roll out their models and reports saying all is well and dismiss the views of anyone who says otherwise.

The normal attack used is to accuse critics of being leftist. Steven Joyce pronounced in Parliament that the Green's and Labour's ideas for control of wholesale electricity prices were tantamount to a return to "crazy, 70s-style, socialist, communist, central power policy".

These internal debates are predictable, have gone on for years and seemingly have got us nowhere.

We can be better informed by looking at similar places such as British Columbia (BC) in Canada.

BC has a population close to New Zealand's and in many respects feels a lot like New Zealand, indeed an up-market version.

But on one metric, affordable electricity, New Zealand is left far behind. The cost per kWh to consumers here is about twice what it is in BC in equivalent dollars (while the median income here is only about 70 per cent that in BC).

Why is electricity in New Zealand so expensive by comparison? This is a serious question needing informed and honest answers, not trite political attacks.

Unaffordable electricity and energy poverty are harsh daily realities for thousands of ordinary New Zealanders.

One key difference is that, over more than two decades, BC's energy policymakers under both centre-left and centre-right governments have resisted going down the path of neo-liberal market-based economics so favoured in New Zealand.

Instead, affordable electricity is seen more as a public good and BC has stuck with a utilities regulator model. The main government-owned monopoly power utility has to routinely go through rate-setting hearings to justify its electricity tariffs, and any proposed price increases.

I visit BC frequently. It's a modern, vibrant economy. The lights are on! There is no sign of under-investment in the electricity sector, including by independent power producers that also are able to compete in the market.

Importantly, there is much less evidence of energy poverty. You'd have to argue that, on this evidence, it is clear which electricity pricing model has worked best - and it's not New Zealand's.


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