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Government's decisions on the Ministerial electricity review fail to address the real issue.


Government’s decisions on the Ministerial electricity review fail to address the real issue.

Electricity is an essential service – no household can function in today’s society without it. The Commerce Act, passed in 1986, extinguished the common law principle of “essential service”. Prices for essential services have to be fair and reasonable. In New Zealand, they are not.

The Electricity decisions offer only one answer to high electricity prices – competition. We are forced to shop around for the best deal.

However electricity prices are changing all the time. If you follow the Government’s prescription, you will never stop shopping around.

Shopping around is great for those who enjoy it. Some people hate it. For electricity, some are physically or psychologically unable to use the internet to shop, or even compare prices.

DEUN wants to see the Commerce Act amended to restore the common law principle of essential service, for which prices must be fair and reasonable.

 The proposed compensation of $10 per week, if companies trigger an emergency savings campaign, can only be described as stingy. Even a 2 month shortage would cost companies less than 10% of the profits they would make, based on the $4.3 billion excess profits from three previous shortages.

The $5m fund designed to help people switch power companies must have a much broader purpose. It must give advice on all household energy issues, not just the price of electricity from different retailers.

 The most important advice is on how to cut energy waste. In some households, advice could lead to hundreds of dollars of savings – not once, but every year. Solutions are specific to each house. New Zealand needs a body of trained advisors who can give advice over the phone, and visit individual houses where necessary.

 A pilot home advisory service is already underway. The best way to reduce New Zealand’s power bills would be to expand this service and ensure it is available to every householder from the highest to the lowest incomes.

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