Right End, Wrong Means, says Energy Minister

  • Max Bradford

A better deal for small consumers is the over-riding goal of the Government's energy reforms which are to be announced soon, Energy Minister Max Bradford said today.

"I share the goals of of the power campaign launched by a number of community groups today, but I do not share their blinkered, backwards ideas about how to achieve those goals," Mr Bradford said.

Grey Power is calling for the energy sector to be regulated and price controlled.

"We had a regulated electricity industry in New Zealand for decades. It was inefficient, parochial and unwieldy. It was characterised by disastrous, money-eating, tax-payer-funded investments such as the Clyde Dam," Mr Bradford said.

"There was no incentive to strive for efficiency. There was no incentive to provide better service or a better deal for consumers. Only full competition can achieve those outcomes - passing the benefits of a honed, efficient industry on to consumers."

The Catholic Church proclaims that power companies will never compete for domestic consumers and only big businesses will benefit.

"The same claims were made about competition in telecommunications. Yet all consumers have benefited hugely from competition with substantial reductions in tolls - $5 weekends, $10 Australia weekends and the like," Mr Bradford said.

"Our estimate of electricity margins for household consumers is $130 a year, and this is well worth competing for on a wide scale," Mr Bradford said.

The Sustainable Energy Forum claims the competitive electricity market place does not use resources efficiently and that new power stations will not use renewable sources.

"This winter was as dry as 1992, yet we avoided a hydro crisis similar to that year because the signals sent by the electricity market this winter enabled efficient use and conservation of hydro resources," Mr Bradford said.

"Furthermore, the new privately funded power stations are more environmentally benign, smaller, much more efficient and make far more use of renewable energy sources than any of the giant tax-funded developments of the past."

Mr Bradford said it was always known that domestic power prices would increase following the reforms in early 1990s while business users stopped subsidising households. However that rebalancing process is complete.

"Now it is time for smaller consumers to get a better deal. The package of electricity reforms to be announced soon takes the steps needed to deliver a better deal, choice and control to small consumers.

"With further breakup of ECNZ, wholesale prices will fall, just as they did when ECNZ and Contact were separated."

Mr Bradford said the Government was determined to see lower prices, as well as further efficiencies from lines and power companies passed on to all consumers.

"Research by Ernst and Young shows the separation of line and energy businesses into separate companies would lead to mergers of small companies, with estimated savings in the order of just under 8% of the average delivered electricity price.

"It will not necessarily lead to significant increased costs in the short term, and in any event such cost increases are easily outweighed by the benefits of future restructuring.