Power firms com­plain of car­nage

Nelson Mail - - Business -

In­de­pen­dent re­tail­ers Pulse En­ergy, Elec­tric Kiwi, Vo­cus Com­mu­ni­ca­tions and Flick Elec­tric have laid a joint com­plaint with the Elec­tric­ity Au­thor­ity (EA) about whole­sale elec­tric­ity mar­ket con­di­tions.

Whole­sale power prices have soared in re­cent weeks. Last month, the aver­age was $300 per megawatt-hour.

That’s nearly three times the high­est Oc­to­ber monthly aver­age pre­vi­ously recorded. It has meant big bills for cus­tomers who pay vari­able rates, such as Flick’s, and has put pres­sure on firms of­fer­ing fixed-price billing.

There have been claims that the big gen­tail­ers are ‘‘gam­ing’’ the mar­ket – and sup­ply­ing their own re­tail brands at a cheaper price than to com­peti­tors.

There have also been ru­mours that small play­ers with­out enough hedg­ing – fu­ture pro­tec­tion against high whole­sale or spot prices – might go out of busi­ness.

On Tues­day, it was re­vealed that Pay­less En­ergy had de­cided to stop sell­ing elec­tric­ity be­cause of that price pres­sure.

The four re­tail­ers, with more than 148,000 cus­tomers com­bined, said the spot prices were not trans­par­ent or jus­ti­fied, and had col­lapsed liq­uid­ity in the hedge mar­ket, threat­en­ing com­pe­ti­tion.

Elec­tric Kiwi chief ex­ec­u­tive Luke Blin­coe said the EA should step up.

‘‘By al­low­ing cur­rent con­di­tions to go unchecked, the EA is fail­ing to reg­u­late this sec­tor with the in­de­pen­dence and vigour nec­es­sary to ful­fil its re­spon­si­bil­ity for pro­mot­ing com­pe­ti­tion and the in­ter­ests of con­sumers,’’ he said.

‘‘This in­ac­tion un­der­mines con­fi­dence in the mar­ket, and ul­ti­mately demon­strates mar­ket fail­ure.’’

Flick chief ex­ec­u­tive Steve O’Con­nor said the high prices showed there was a flaw in the mar­ket de­sign.

‘‘This sit­u­a­tion is not about ‘busi­ness as usual’. It is about op­por­tunism driven by a lack of well-sup­ported com­pe­ti­tion – op­por­tunism that has al­ready seen three in­de­pen­dent re­tail­ers exit the mar­ket,’’ he said.

‘‘We are el­e­vat­ing this is­sue on be­half of our cus­tomers and all Ki­wis, who de­serve a prop­erly func­tion­ing mar­ket that en­ables prod­uct in­no­va­tion and con­sumer choice.’’

Vo­cus’ head of reg­u­la­tory and com­mer­cial, Johnathan Eele, said: ‘‘Es­sen­tially the big gen­tail­ers have been rip­ping off Kiwi fam­i­lies for decades and will con­tinue to un­less they are made to change their prac­tices.’’

The four firms are lodg­ing an un­de­sir­able trad­ing sit­u­a­tion (UTS) claim for ur­gent con­sid­er­a­tion by the EA.

The mar­ket reg­u­la­tor is obliged to con­sider the claim and make a de­ci­sion as to whether this con­sti­tutes an ‘‘ex­tra­or­di­nary event’’ that threat­ens con­fi­dence in the whole­sale mar­ket.

–Stuff

ROSS GIBLIN/STUFF

Flick Elec­tric boss Steve O’Con­nor says high prices show there is a flaw in the mar­ket de­sign.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.