Consumer NZ has outlined a series of moves it believes could help bring down soaring power prices.
It comes as the price of electricity has surged an average of nearly 20% over the last two years, the advocacy body said.
A recent survey by Consumer found that over a million households were concerned about energy costs, with one in four struggling to pay their power bills in the last year. It found one in 10 had to take out a loan to pay for power.
Consumer said one in five households had cut back on their power use, while 19% of people went to bed early to stay warm.
“The stats are pretty confronting,” Consumer chief executive Jon Duffy told Breakfast.
“New Zealand likes to think of itself as a developed modern western economy, and we’ve got one in four people, 25% of our population, struggling to pay their power bill.
“It’s really not acceptable.”
The organisation had unveiled a petition calling for government action, with a four-step plan it believes will help lower power bills.
The first step would be to break up the four big power companies, or gentailers – Genesis, Contact, Mercury, and Meridian, which control about 90% of the electricity market.
Earlier this year, the four gentailers reported a combined profit of $547 million.
Consumer wanted the companies to separate the parts of their business that generate power, and the parts that sell it.
“At the moment, those generators can cross-subsidise what their retailers’ arms are doing.”
“And that makes it really, really difficult for small independent retailers to compete.”
Duffy said more competition would lead to lower lower prices and more choice for consumers.
The next step would be to ensure power prices reflected the real cost of power.
Duffy said consumers were paying prices set by high-cost fossil-fuel generation, even though most of New Zealand’s power came from cheap renewable sources.
“Rain from the sky, sun and wind are all free inputs.
“Obviously you’ve got to put in the infrastructure, but they’re much cheaper than coal and gas.”
The next step would be to invest in homegrown energy.
New Zealand relies on hydropower, but some years bring less rain and snow, so lakes and rivers cannot replenish dams, resulting in dry years.
The Government has announced it’s building a new liquefied natural gas import facility in Taranaki to address this, but Consumer thinks it would be better to invest in more renewables such as solar, wind and geothermal.
“Knee-jerk reactions, like building an LNG plant, for example, that ties us to volatile offshore energy markets don’t seem like a sensible strategy,” Duffy said
Finally, Consumer wanted a long-term, cross-party energy strategy to be implemented.
“This is an enormous problem for our society, and successive governments have failed to produce an overarching, bipartisan energy strategy,” Duffy said.
He said a plan everyone agreed on would allow all players in the system to know what they’re doing and know what New Zealand was aiming for as a country.
The Government has announced several measures it hoped would help to lower power prices.
Among them were the LNG facility; obligations requiring large electricity buyers to secure back-up supply "well ahead" of forecast dry winters; and harsher fines for rule-breaking.
In May, the Government announced new electricity market rules, barring the big gentailers from offering better wholesale pricing arrangements to their own retail businesses than they do to independent power retailers.
They would also be required to submit annual plans to the Electricity Authority showing how they will comply, and to demonstrate every six months that their retail prices reflect the actual expected cost of electricity.
Duffy said it was time for New Zealand to adopt a new system to achieve lower prices.
New Zealand operated a system following the Bradford reforms in the late 90s, which split the Electricity Corporation of New Zealand into three competing state-owned enterprises to create competition and lower prices.
“Those things have not materialised,” he said.
“We’ve given this a really good crack, and it’s clear it’s not working for consumers.”
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