Power review a smoking pop-gun
Anyone hoping for a radical shakeup of the electricity sector would have been sorely disappointed by this week’s first report from the Governmentappointed review group.
A creature of NZ First’s coalition demands, the review found a lot to like about the way the electricity sector is set up.
The fact that power company share prices all bounced up after the report’s release is a powerful indication that investors see more bark than bite in the review process.
Among the pluses: achieving 80 per cent-plus renewable electricity without subsidies; a lack of evidence of excessive profits; and a highly competitive retail electricity market in which prices have hardly moved since 2015.
Most of its market design issues are either tweaks or forward-looking to a future where customers generate their own electricity and can better control their energy spend.
Not that you’d know that from most reports of the findings, which focused on the more than 100,000 households spending more than 10 per cent of their income on power.
These are often the same households squeezed by high rental costs caused by housing market dysfunction and skyrocketing petrol prices. Energy costs are clearly part of a wider problem of unaffordability for this group.
But the average household is only paying 3 per cent of its income on electricity, customer switching rates are strong, and trust in the sector is high compared with Britain or Australia. So it’s not quite the problem NZ First had in mind when it pressed for the inquiry.
The party’s self-appointed big-business basher, Shane Jones, has been itching to add power company bosses to his list of corporate miscreants. This report gives him little to go on.
Energy Minister Megan Woods was also clearly struggling for an attack line in her press statement on the report. The best she could find was that the electricity market ‘‘isn’t working for everyone’’.
There are hints, too, of tensions between the industry experts and consumer advocates on the review group itself.
In her foreword, chairwoman Miriam Dean notes that: ‘‘We can be proud that New Zealand is ranked ninth out of 125 countries in the World Energy Council’s Energy Trilemma ranking (measuring security of supply, equity and environmental sustainability), and that we are the only nonEuropean country in the top 10.’’
Yet just a few lines later, Dean’s letter suggests the review group is grappling with accepting the argument that says it’s generally impossible to fully satisfy the desire for electricity that is at once sustainable, cheap, and reliable.
‘‘In our view, the aim should be to replicate our World Energy Council ranking for a different trilemma – that of fairness, affordability and competitiveness.’’ Given that fairness and affordability are two sides of the equity coin, and that a market with 36 electricity retailers looks pretty damn competitive, this sentence looks more like an attempt at compromise than a statement of principle.
That said, there are several areas where the Government could act against energy poverty, and to better effect than the blunderbuss ‘‘winter energy payment’’, which is paid to all eligible recipients irrespective of income and can be spent on anything.
One area already under way is rental warrants of fitness – a housing rather than electricity market intervention.
Another is the ludicrous lowuser regulations, which were supposed to make electricity more affordable for some customers but miss out large families with big power bills while favouring apartment-dwelling yuppies.
Another is the absence of a retailer of last resort. It is not acceptable that people with bad credit records can be turned away by every retailer in the country.
And, finally, it’s time to stop the rort of pre-paid metered power being so much more expensive than other electricity. It’s a tax on the poor that can’t be justified.
Pre-payment meters save power companies not only millions of dollars chasing unpaid bills, but also protect their reputations by putting disconnection in the hands of the customer.
–BusinessDesk
Shane Jones has been itching to add power company bosses to his list of corporate miscreants. This report gives him little to go on.