A contingent of Labour MPs consigned to forever working as the Opposition – including party leader David Shearer – held a public lecture on Monday 12 August at Knox Church Hall to tell us that “we are being ripped off.” Apparently, this problem can be solved by their NZ Power policy, which claims to cut power bills by hundreds of dollars a year, restrict future price increases, and help businesses compete in a boosted economy.
Underlying NZ Power is a public regulatory price-setting process that will see the agency act as a single buyer of wholesale electricity, said Shearer. In light of electricity prices rising at twice the rate of inflation, Labour hopes that NZ Power will introduce a fairer pricing system in which electricity companies get a fair return and consumers receive fairer prices. “[NZ power] buys all the electricity off generators and passes it on to retailers … retailers will be able to buy electricity for exactly the same price as anyone else,” Shearer intoned monotonously.
In his characteristically circular and incomprehensible way, Shearer highlighted that opponents of NZ Power – such as the National Party – have significant interests in power companies. According to him, the sale of Contact Energy in 1999, Mighty River Power this year, and the looming sale of Meridian have (and will) see profits move out of NZ and fewer jobs created here. “You can see that we are up against some pretty big interests in terms of what we are trying to do,” he said. “But I’m determined – we’re determined – to push this through so that we get cheaper electricity and a better deal for New Zealanders.”
A 2009 report for the Commerce Commission calculated $4.3 billion in “excess [electricity] charges.” Accordingly, Professor Frank Wolak of Stanford University (whose work underpins the Labour Party’s electricity policy) has criticised the current industry model, in which electricity companies own both generation plants and retail businesses. Speaking to the Institute for the Study of Competition and Regulation, Wolak said the policy makes him feel “a little bit better” but that the real problem is “runaway retail prices.” Wolak said more competitive reform was needed in electricity generation and retailing.
Shearer also invoked an emotional vote for the policy by dedicating the evening to Susan in North Dunedin and the “thousands and thousands of people like Susan” who, due to steep power prices, are in bed by 6pm just to keep warm.
Shearribly Dull
