Editorial - Fair play over power prices

19:32, Jun 24 2012

Energy analyst Molly Melhuish raised several concerns in her submission on the Mixed Ownership Model Bill. Among them, the bill will lock in a regime she regards as inappropriate for regulating an essential service. In all other jurisdictions, she argued, this carries the expectation it will be delivered to all classes of consumers for a reasonable price.

This country, however, treats electricity supply as a means to economic growth, rather than an essential service. Free-market pricing promotes expansion of the electricity system, enabling energy-intensive industries to expand "at the expense of higher prices to domestic consumers".

Ms Melhuish also showed private-sector power companies charge about 12 per cent more for electricity than their state-owned counterparts. Energy and Resources Minister Phil Heatley floundered when asked by Labour MPs for the weighted average price residential consumers were charged by state power companies for a certain amount of electricity, compared with privately owned company charges.

The issue was "complex", he said. Yet Ms Melhuish had done her sums using data on an Economic Development Ministry website and Speaker Lockwood Smith said he thought he could do the sums himself. He also said Mr Heatley's officials should be sacked, if they couldn't do likewise.

Labour leader David Shearer claimed power price rises were New Zealanders' biggest concern about partial privatisation plans. Finance Minister Bill English rejoined that more New Zealanders than ever were switching suppliers to find the lowest price. But the number of people seeking better deals might be a measure of desperation, as consumers struggle with crippling power bills, rather than of competition delivering fair prices.

Ms Melhuish also revealed that residential power increases in New Zealand have outstripped those in other developed countries over the long term and ours was the only developed country in which power prices kept rising after the recent recession. Those prices seem likely to rise further, no matter who owns the power companies. Some of the energy being spent on opposing the Mixed Ownership Model Bill might be usefully diverted to encouraging a review of the regulatory regime.


Waikato Times