18 Apr 2013

Opposition parties propose single buyer of electricity

10:35 pm on 18 April 2013

The Labour and Green parties propose setting up a single buyer of electricity to help bring down the cost of power for households and businesses.

It has prompted the National-led Government to accuse them of introducing North Korean-style state control of the electricity system.

The proposal is to have a single Crown entity called New Zealand Power buy electricity from power generators at a set price and then pass the savings on to consumers.

Labour and the Greens say that would save the average household $300 a year.

Labour leader David Shearer says independent economics consultancy BERL estimates that the new system will create 5000 new jobs and add $450 million to economic growth. Under the plan, state-owned power companies would not have to pay dividends or tax.

But government ministers say the policy would drive up costs and increase the risk of power blackouts.

Economic Development Minister Steven Joyce says the Government has made changes to the electricity system to promote more competition and that had already helped slow the rate of increase in power prices.

He was scathing of the Opposition parties' policy, saying it comes from the "North Korean school of economics", while other ministers say it would be more at home in Albania or communist Russia.

However, David Shearer told Radio New Zealand's Checkpoint programme on Thursday that Brazil, South Africa and 30 American states use the same model.

"I wouldn't have called United States exactly Albania. The bottom line here is that our power prices have gone up $700 and more, accounting for inflation, over the last 10 or 12 years.

"What our new proposal will do will bring power bills down by $330 a year and will put a lid on future price rises."