5 Jun 2013

Authority to monitor electricity retailers' charges

8:47 pm on 5 June 2013

The Electricity Authority is launching a residential retail pricing index to scrutinise charges by retailers, but can't guarantee that prices will fall.

The authority on Wednesday unveiled details of its plans for the next year and its response to calls for reforms by energy campaigners and the Opposition.

Figures show while prices for commercial and industrial users have remained relatively flat, residential prices have risen steeply in the last 10 years.

The authority says the index is among a number of high priority pro-competition initiatives it is pursuing.

It says the residential retail market has become more competitive, but the authority needs to do more to enhance the competition.

Chief executive Carl Hansen says the pricing index will give a better picture of the retail market and the authority will also look at ways of helping new, smaller retailers grow and compete better.

No benefit in central planning model - chairman

The authority responded to calls from Opposition parties and other critics for industry changes, saying they would not benefit consumers.

In April this year, the Labour and Green parties unveiled plans to bring the electricity industry under greater state control if they win the general election in 2014. The parties said they would set up a single purchaser of electricity which would then pass on savings to consumers.

Authority chairman Dr Brent Layton says the criticism of the industry is not based on sound economics and calls to return to a central planning model would not benefit consumers.

The authority believes the Opposition's plan would shrink the New Zealand economy and have a chilling effect on investment. But Labour's finance spokesperson David Parker says that's just plain wrong.

"That's a nonsense argument. That's like saying the old Telecom should never have been bought to heel for its overcharging because no one would invest in the telecommunications sector in the future if they were more regulated.

"Well, we actually know that that didn't come to pass - there were people at the time who said they were wrong, just as Dr Layton's wrong on this occasion."

The authority also says such a system would not be successful in New Zealand and hadn't worked overseas.

However, the Green Party says the model has worked successfully in South Korea. Co-leader Russel Norman said clearly, Dr Layton is embarrassed because power prices have been rising at twice the rate of inflation under his watch.

"We know that these single buyer models work very well overseas. So to make these ridiculous claims is purely politic."