A self-styled eminent persons’ group of business lobbyists and local body politicians yesterday challenged the Government to abandon its hands-off approach to electricity regulation and “pause” power transmission price changes which would see some parts of New Zealand pay more for their power.
Later in Parliament the acting Prime Minister sounded hesitant when questioned about the charges.
The group – which included Federated Farmers and the Auckland Employers and Manufacturers’ Association — called for a return to the “socialisation” of charges for utilities like electricity, telecommunications and roads.
By that, they meant that the total cost of a network should be spread evenly across all citizens.
Counties Power CEO, Sheridan Broadbent said that for the past 150 years the benefits of cost socialisation had made New Zealand successful.
“This is not a time to be changing the history of cost socialisation,” she said.
“It’s worked for telecommunications; it has worked for roads, and it’s worked for rail.
“So we don’t understand, and our primary producers don’t understand why this ahs to change.”
This row has been brewing since the Electricity Authority published its proposals to change the way consumers pay for the cost of the transmission network.
Simply, it proposed that prices would go up the further away a consumer was from the generators.
The Electricity Authority has published a “heat map” showing the largest increases in dark red and the largest gains in dark green.
It is self-explanatory – price reductions in the south; price increases in the north.
Unfortunately (for National) the impact of that will hit hardest on Auckland and the north.
That’s likely to be ground zero for the next election campaign.
It was no co-incidence that NZ First’s Deputy Leader, Ron Mark was at the press conference held by the group even though his home base of the Wairarapa could see a reduction in charges.
But Mark was filling in for NZ First Leader, Winston Peters, whose Northland electorate would see some of the biggest price increases.
Even the Far North Mayor, John Carter, a former National Minister and Chief Whip who played a very active role in the by-election campaign against Peters, says that the proposed charges would help Peters hold the seat.
“It’s the sort of thing that could have a quite significant political impact, no question about that, ” he told POLITIK.
“But I’m sure that the Government are thinking about that sort of stuff.”
What the group want the Government to to do, in the words of the EMA CEO, Kim Campbell, is to “hit the pause button” on the charges.
Though the Electricity Authority is an independent body, there are avenues for the Minister to issue statements to guide the Authority and to ask it to review any industry matter he wants.
Mark questioned acting Prime Minister Bill English about the proposed increases in Parliament shortly after the group finished their press conference.
English subtly avoided the question.
”I cannot recall a time when consumer prices for electricity have been less contentious,” he said.
“ In fact, I believe, under this Minister’s watch, they have been dropping to some extent, which is a pretty major achievement, and I would have thought the member would want to congratulate him on that.”
But the Minister’s reply when asked how hard up families in Northland could deal with another $15.5 million in power charges was more enigmatic.
“All participants in this discussion should take into account the impact on households and businesses—and, in particular, households and businesses in the region.”
That is precisely the point the press conference was making.
However the Electricity Authority has pointed out that things in the north are not quite as straightforward as the press conference, and Mark have made it seem.
The Authority argues that Vector (based in Auckland), Northpower and Top Energy are major beneficiaries of recent major transmission investments in the upper North Island, such as the North Island Grid Upgrade which cost $894 million.
The Authority says the northern charges’increase would reflect the benefits they receive from these investments.
“The Grid Upgrade provides the upper North Island with considerable benefits, both regarding access to lower electricity prices and improved reliability. “
The upgrade means that the north can now access cheaper power from the south rather than having to use power from the high-cost Southdown and Otahuhu power stations which have now been closed.
Northern power consumers also use much less power than southerners.
The Authority says Top Energy (based in Kerikeri) consumers use only 69% of the annual consumption of a Christchurch-based Orion consumer.
Under the proposals, the Top Energy consumer could pay around $90 a year more whereas an Orion consumer would get a $50 discount.
That’s the political problem with the proposal.
It pits region against region.
Carter also says it would be devastating for the North which already has the highest unemployment in the country.
“For a lot of people it’s a lot of money,” he said.
“It could be the difference between a school uniform, a school trip or even the difference between food on the table.”
Kim Campbell – who chaired the event – took up Ms Broadbent’s theme of socialisation of costs.
“This is not a north-south discussion,” he said.
“Over the years we’ve used the socialisation of cost with highways and now with broadband.
“We’re a nation,
“We don’t live in an economy; we live in a country.
“We share all of these things together, we’ve paid for them, we’ve met the pain together and to suddenly turn the clock back 100 years through some faceless bureaucracy in Wellington is unacceptable.
“It’s time to push the pause button.”
The Authority doesn’t expect the charges to begin applying until 2019 — a gap that the Government may well be grateful for.