REPORT REJECTS POWER COMPANY ARGUMENTSEnergy
"There is no reason at all why electricity prices should rise for domestic or rural consumers under the Coalition Government's proposed reforms," Energy Minister Max Bradford said today.
"If these prices do rise, it will only be because of explicit decisions by the power companies themselves, and not because of the effect of the Bill. Nor does this issue have anything to do with ownership separation."
Mr Bradford said the Electricity Supply Association (ESANZ) had run a concerted campaign over the past few weeks to confuse people, to misconstrue the electricity price statistics, and to scare vulnerable groups of electricity consumers.
"Unfortunately, it is a typical reaction from a sector with substantial regional monopoly power which doesn't want to lose its privileged place in a market capable of delivering lower prices and better services to consumers," he said when releasing an independent report prepared for ECNZ.
The report rejects the power companies' argument against one of the key elements of the Coalition Government's proposed electricity reforms - the ownership separation of lines and energy businesses.
"The weight of evidence clearly supports ownership separation rather than the weak alternative proposed by the power companies' representative organisation, ESANZ," said Mr Bradford.
"This report comes on top of compelling evidence from the British electricity and gas industries, as well as the OECD and the IEA, all of whom strongly recommend ownership separation.
"The Government would not be contemplating such a major step as ownership separation unless we were convinced that it is an essential component for delivery of lower prices to consumers.
"Separation is needed in addition to another important part of the electricity reform package, the split of ECNZ into three separate, competing generation companies - which is supported by the power companies.
Mr Bradford said the current reforms had been a long time coming. "They were signalled by the Government in 1995 if competition didn't develop and if electricity prices didn't come down for consumers," he said.
"The simple fact is that power companies have eaten up the lion's share of greater efficiency in the state owned generation sector without passing them through to consumers in the form of lower electricity prices.
"The Electricity Reform Bill will achieve that, and that is why the Government has introduced the reforms in the way it has.
"If you want an example of a similar reaction to that of ESANZ, look at what the oil companies were saying before Challenge! arrived, and what happened to petrol prices then. If you want an example of what can go wrong where a company has a monopoly, look at Mercury's performance towards its consumers," said Mr Bradford.
Note: The report is being distributed to Parliamentary Press Gallery journalists. Please contact this office if you would like a copy posted to you.