What does DEUN campaign for?
- Fair electricity pricing which reflects real costs but not market power of either generators or retailers.
- Investment to reduce energy waste whenever this is cheaper in the long term than new energy supply.
- Support for housing retrofits for all vulnerable consumers to improve health outcomes and reduce power bills.
- Moratorium on installation of new meters until all have “smart chips” that deliver benefits to householders.
- Genuine consumer choice between electricity and alternative fuels consistent with maintaining indoor and outdoor air quality.
- No privatisation of electricity assets.
Government's Ministerial Review on Electricity Market Performance wants to fix just two electricity problems: unreliable supply and "excessively high" prices. The Review proposes only minor changes to the present muddle of competing power companies, transmission and lines companies, and regulators. This is a costly, bureaucratic, and utterly mysterious system which demands ever-higher power bills from household and small-business consumers, while keeping electricity cheap to big industrial users.
DEUN wants to simplify the way New Zealand generates, transports and sells electricity. We will make specific proposals when we have thoroughly researched the issues. First we identify the real problems to domestic consumers:
Ever-increasing household electricity bills
Unreliable supply in dry years is a tiny part of householders’ problems. Many people are short of electricity because they cannot afford their power bills. In 2007, 24% of New Zealanders needed to spend more than 10% of their income to maintain temperatures recommended by World Health Organisation for health and wellbeing. This is fuel poverty – the proportion doubled from 2001 to 2007, and is still rising.
Unfair electricity prices
Until the market began in 1991, domestic electricity prices rose and fell in line with commercial and industrial price trends. Since market pricing began, the trends diverged. Domestic prices in real terms have risen relentlessly, while commercial prices rose much less, and industrial prices have barely risen.
Excess profits to electricity companies
Between 2001 and 2007 generator-retailers (“gentailers”) made at least $4.3 billion excess profits from high spot prices. Spot prices (the price for immediate payment and delivery) rose even higher in 2008, so the number is substantially higher today. In the 1990s, electricity lines companies made excess profits which allowed a lump-sum wealth transfer of $2.6 billion from consumers to shareholders.
Excess profits get locked into the companies' asset values, so power companies can then charge higher prices to get an "acceptable return" on their assets. And high asset values are the first step towards privatization of the assets.
See the DEUN Manifesto for affordable domestic energy services.