Sunday, March 28, 2010

Goodbye to cheap electricity

Among those complaining about the inexorable rise in electricity prices is Age Concern – the organization that represents the interests of the elderly. On March 17, it said:

"The relentless rise of domestic electricity prices is not caused by normal market forces. It is a direct result of market power, which permits ever-increasing profits by gentailers.

"These are the dominant generator-retailers – Meridian, Genesis, Mighty River Power, Contact, and Trustpower. Their excess profits come from retail customers least able to afford them.

"The Electricity Industry Bill (currently being considered by a select committee) proposes only minor reforms. These are wrongly focused, and will benefit the suppliers at the expense of consumers...

"Successive Ministers of Energy have failed to act to prevent excessive price rises. Government agrees with gentailers, saying that average wholesale prices must be high enough to ensure new power stations are profitable.

"Domestic price rises are paying disproportionately for new power stations, because the increase in power demand is not coming mainly from them, but from commercial and industrial consumers.

"New Zealand’s electricity market design has failed its promise of being good for consumers. The spot market was designed to drive wholesale prices down, not up. They should reflect the cost of running existing power stations, not building new ones..."

In the above cartoon, from the Manawatu Standard of February 12, 2010, the indifferent dowager on the right represents Gerry Brownlee, (National) Minister for Economic Development and Minister of Energy and Resources.

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