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Chris Ford: Gerry Brownlee Giving Us More Of The Same On Power

Contributor:
Chris Ford
Chris Ford

Last week Gerry Brownlee released the long awaited ministerial review of the electricity sector. Once again it gave us the same old, same old....more market-driven competition and even less state involvement in electricity policy.

The proposals contained in the report include a proposal that lines companies (the successor of the old power boards) should be able to re-enter the electricity market to further spur competition, that the Electricity Commission be scrapped and replaced by a smaller regulatory body, that the back-up Whirinaki generation plant be mothballed to give an incentive to generating companies to plan their own drought-year supplies and furthermore, regarding the existing electricity SOEs Meridian and Mighty River, that they be further split up into new companies so as to create greater competition amongst power generators who would then on-sell power to the greater number of retailing companies.

All this sound familiar in terms of the refrain that the market will solve everything? That our electricity sector will work more effectively in favour of the consumer rather than the retailers and generators under the new structure?

Of course it does! Remember Mad Max Bradford's electricity sector reforms of the late 1990s that witnessed the dismantling of the old Electricity Corporation and its myriad splitting into a number of generating and retailing companies? These reforms were supposed to work weren't they?

Well the reforms didn't exactly work the way they were intended to at all. What with a 72% increase in household electricity prices just in this decade alone, nearly three drought year events in the past ten and a spate of public relations disasters for the power companies which have included the Folole Muliaga tragedy and the Contact Energy bosses' bonus payouts to themselves have all given ordinary New Zealanders good reason to despise power companies and the market system that they operate under.

The only half-decent recommendation contained in the report was to shorten the timeframe for consumers to switch power companies from the present 23 days down to three days. Whoop-de-doo, what a difference that will make in that I will now be able (along with you, dear reader) to switch from one screwy power company to an equally more screwy power company in less time than previously. Really, the power companies behave in much the same way as telecommunications companies in that they exploit a monopoly resource in order to maximise profit at the expense of the ordinary consumer and stuff any pretence of price competition as we simply get charged more each year through tariff rate increases!

What really needs to happen as I have outlined in a previous blog is to bring the electricity sector back under full state control, initiate a national energy policy which would focus on enhancing energy efficiency and developing alternative clean energy sources such as wind, power, wave and solar to complement existing hydro generation and effectively either control and/or subsidise the cost of electricity for ordinary householders. Committments along these lines were made by the Alliance (and to a lesser extent the Green) parties at the last election.

As I said in the blog written after the review was ordered earlier this year I wasn't expecting anything great from the National Government on electricity policy. But it's really time to re-think our attachment to the same old market-driven policy on power as the same cycle will just keep on repeating itself of more private sector involvement leading to more price rises before a more progressive, left-wing government finds the guts to pull the plug on the whole failed policy.

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