Power report charged

20:20, Feb 10 2014

POWER POINTS Business NZ report: Secure supply, no blackouts or crisis in dry years from energy market failure. Competition has been restraining retail prices since 2010. Investment in generation, transmission and distribution is keeping ahead of demand. But retail electricity price increases in the last decade "have not been well explained or justified" and were not "transparent enough". Not enough action to address "energy hardship" or "fuel poverty" for some power consumers living in homes that are "too cold and too damp".

Labour/Greens power plan: Supply would be underwritten by government and costlier than the current system. Cutting consumer prices in the short term by central control of wholesale purchasing would ultimately put a greater burden on taxpayers and higher consumer prices long-term. Energy hardship felt by some consumers would not be fixed by NZ Power policies much, if at all.


The Labour/ Greens "NZ Power" plan could drive electricity prices up, not down, and would not fix "energy hardship" problems, a report commissioned by Business New Zealand says.

The report by Sapere Research Group was commissioned to see how effectively the electricity market was working. "The electricity market is now more competitive than at any time in the past," the Sapere report says.

But critics slammed the report as a political attack on the Labour/Greens NZ Power proposal, which would bring in government control through central planning and a single buyer of wholesale electricity and the single supplier to electricity retailers.


Sapere said NZ Power would put "at risk" the gains made since the electricity market was set up, and "would not be able to deliver on the commitment to reduce prices".

"There is a very real risk that the proposals would result in higher electricity prices and less secure electricity by undoing the achievements that have been made and repeating past mistakes," Sapere's report says.

Business NZ chief executive Phil O'Reilly said they recommended that the present electricity market system be kept, because it was "superior to the alternatives". But, efforts should be made to improve price "transparency".

The Government should also look at the "nature and size of energy hardship", O'Reilly said.

Labour energy spokesman David Shearer said the Business NZ report could not hide "the unpalatable truth that New Zealand power prices are too high."

"No matter how much the report from Sapere tries to justify the current electricity pricing model, it is clear we must have substantial change," Shearer said. Electricity demand was falling but prices were still going up, "hurting New Zealand families".

"That tells me and the rest of New Zealand that the market is failing," Shearer said. Labour's NZ Power policy would cut household power bills by hundreds of dollars a year and it would lower prices for business between 5 per cent and 7 per cent.

Wellington academic Geoff Bertram said the report ignored whether consumers were treated fairly. There had been a pattern of reports from the Electricity Authority and now Business NZ, responding to the Labour/ Greens power policy.

"They are all fundamentally political documents to undermine the Labour/ Greens proposal, although they included 'constructive' information on Labour's plan. But they have ducked the question of what's fair," Bertram said. Fairfax NZ

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