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Electricity Review Out For Discussion

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Aug 12 NZPA - Retail electricity prices are excessive and changes in regulatory control, allowing line companies to retail electricity, are recommended in an electricity review released today.

The review also recommends encouraging consumers to switch retailers for better deals and transferring assets between State Owned Enterprises.

The ministerial review was commissioned by the Government over concerns about rising electricity prices to consumers.

It is now open for a five week consultation period, but government ministers have already vetoed two of its recommendations.

The review offered three options for restructuring SOE assets.

The first would create a new SOE and transfer other power generators to existing retailers.

The second would transfer generators between Solid Energy, Genesis and Meridian while the third would be limited to Genesis and Meridian.

Energy Minister Gerry Brownlee said government ministers had already ruled out options one and two as too costly and risky and would "need to be convinced" about option three.

The role of Whirinaki power station was also an issue for the review which recommended it be reassigned or sold.

SOEs should be required to disclose their risk position and other relevant information, the review said.

The Government did find "many of the recommendations appealing", Mr Brownlee said.

Rather than preparing for periods of low-lake levels power companies, particularly Meridian which relies strongly on hydro power, had gone to the Government seeking a conservation campaign, he said.

The frequency of such campaigns led to perceptions New Zealand's power supply was vulnerable which was "undesirable and unnecessary", the review said.

"It is important, therefore, that public conservation campaigns are only used as a last resort."

To ensure that, the report recommended retailers be required to pay consumers for conservation campaigns and that there be a floor price on spot prices during the campaign.

The Electricity Commission should be replaced with an Electricity Market Authority which would be an independent Crown entity and focus on efficiency and reliability in the electricity market.

Mr Brownlee said the commission did "too much and has too many competing responsibilities".

At the same time the Energy Efficiency and Conservation Authority would undergo a strategic review and lose the responsibility of a electricity regulator and major grid upgrades would be authorised by the Commerce Commission, the review said.

The review also recommended the Government spend $5 million promoting the benefits of customers switching power companies to best suit their needs and for the timeframe for switching to be reduced.

Mr Brownlee said retail electricity prices had risen 72 percent in the past eight years and needed to be flattened because there were price drivers such as climate change looming in the future.

The Government had been very careful not to "make bold claims" about what the future price may be, but was not prepared to sit back and do nothing, he said.

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