Power to the people, not market forces

Electricity is no longer an optional extra or modern convenience we can choose to do without . . . It is as essential as the air we breathe and the water we drink.

We have waited for more than 20 years for the promised savings from the 1997 restructure of our system of electricity generation and supply to materialise. They were never going to and we have families who cannot afford their power bills as well as buy groceries. It should have been no surprise to learn that the International Energy Authority said last year that household electricity prices in New Zealand have grown faster than in other countries and that rises between 2009 and 2014 were ‘‘significant’’.

It remains one of the more glaring examples of the catastrophic failure of applying the flawed principles of neoliberal market forces to an essential commodity. Electricity is no longer an optional extra or modern convenience we can choose to do without as it was in our grandparents’ time. It is as essential as the air we breathe and the water we drink.

For a previous generation getting in the firewood was a regular chore which required hard work and skills with axe and saw. Today many households don’t even own an axe let along anyone with the ability to use one with safety and many homes become uninhabitable without electricity. Apart from no power for heating and cooking, turning on a water tap requires electricity to drive the pump, meaning toilets and showers cannot be used.

In the push to clean up the air in winter, particularly in towns and cities with a serious smog problem, some local authorities are encouraging, and in some cases requiring, home owners to get rid of solid fuel heaters and become totally reliant on electricity. We have built our entire society to be solely dependent on electricity. Without it our world would grind to a halt in a few hours. Communication systems and industries would shut down and city roads would be death traps. Turning off the power today would be the equivalent of an unsurvivable heart attack for the country and yet we allow obscene profits to be made from it in the fatally flawed belief that market forces will solve all problems. They don’t. They simply create new ones.

These facts were well understood in 1997 when former National minister Max Bradford deregulated the power market against sound advice and the will of the community. To the alarm and anger of consumers, Bradford set about unravelling the former system with almost religious zeal.

Up to that time we had the government owning and operating generation and high voltage power lines and locally elected power boards as retailers and managers of low voltage supply lines. There were no market forces or competition between power boards. There was no need for them but the old system was thrown out, baby, bath water and all.

There were replaced by a bizarre multi-headed, money-making monster consisting of generation companies, about 30 lines companies and numerous retailers all taking profits from consumers with little regulation and no consumer control. Those who sought to generate their own electricity with solar panels and other technology have been discouraged by prices and scaremongering.

In a strange contradiction one of the world’s most toxic industries, aluminium smelting, was encouraged to establish in New Zealand with very low electricity prices and a $30 million bribe to remain when market forces put the industry under threat.

The smelter was opened in 1971 following the construction of the Manapouri Power Station by the government to supply it with electricity. It now uses a massive 13 per cent of New Zealand’s total electricity production.

Reacting to a 50 per cent increase in power prices in the past 17 years, newly appointed Energy Minister Megan Woods has launched a major review of the electricity market, from generation to retail and distribution.

That review is long overdue but it remains to be seen if it will deal with the underlying problem of inappropriate market forces applied to an essential commodity regardless of how it is generated. There is no possibility of returning to locally elected power boards as the Government also wants all electricity generation to be from renewable sources by 2035. That is a commendable if idealistic goal but much more acceptable than the enforced deregulation of the system 20 years ago which helped create many of the problems the new government must deal with.

The predictable lesson from all of this is that there are some services and commodities, on which our lives depend, which must never be subjected to market forces. Along with education, health services and drinking water, we must include the supply of affordable electricity.