Wellington, Oct 29 NZPA - A consumer lobby is calling for the Government to reinstate electricity as an "essential service".

"There is going to be increasing public pressure to re-litigate whether electricity is an essential service," Molly Melhuish, co-convener of the Domestic Energy Users' Network (DEUN), told the commerce select committee at Parliament today.

The supply of electricity should follow principles of equity, fairness and sustainability.

No consumer should be deprived of electricity they needed, or have to pay an undue proportion of its cost, and incentives should reduce rather than increase energy waste, she said.

Ms Melhuish -- a veteran campaigner for sustainable energy use -- told committee chairman Peseta Sam Lotu-liga that the concept of electricity being an essential service was extinguished by the Commerce Act in 1986.

And its diminished status was confirmed at the Privy Council in a 1994 ruling involving telecommunications.

She said key policy papers "buried deep in the Electricity Commission website", on electricity distribution pricing methodologies, approved charging domestic consumers the highest possible price.

At the same time, it allowed "competitive" consumers -- big commercial customers -- to negotiate their prices down to the short-run incremental cost of adding new supply.

"The Commerce Act says you can price (electricity) as unreasonably as you want, despite the fact that it is essential -- it only becomes unreasonable when it goes above the total cost of new facilities," she said.

The Commerce Commission had confirmed that "efficient pricing" lay between that short-run cost and the standalone cost or long-run marginal cost of supply, she said.

"DEUN calls for the Commerce Act to be amended to restore the concept of electricity as an essential service," she said.

The Electricity Act was likely to have to be amended anyway to accommodate recommendations from a ministerial review.

Ms Melhuish said initial recommendations had been for the new Electricity Market Authority to not be required to meet the objectives of being "fair" or "environmentally sustainable", and those to be made political rather than regulatory matters.

"This would only perpetuate the present unjust pricing," she said.

Asked by MPs for evidence that the Electricity Commission allowed the industry to "pad its costs", Ms Melhuish said that was supported by the ministerial review's conclusions that retail prices in NZ were in the order of twice the corresponding retail prices for similar domestic consumers in Australia.

Many people were caught in an energy poverty trap -- high energy costs meant they also faced increased medical costs and had less access to education.