Big offender leads by example

By RICHARD BRADDELL utilities writer

Meridian Energy scores worst in customer satisfaction, but has set the benchmark for state-owned enterprise peers Mighty River and Genesis in doing something about it, Parliament's commerce select committee has found.

In a report on the three electricity generators, the committee said it was concerned at billing delays, switching problems and low customer satisfaction in the industry.

But although Meridian was the worst offender, its careful approach to measuring and monitoring progress against performance targets set the benchmark for others to follow.

Meridian's problems, which stand out in an industry where customer satisfaction has dropped from 44 to 40 per cent, owed much to rapid customer growth and inadequate performance by an outside provider of customer billing services.

As a result, Meridian stopped active marketing.

The select committee's chairman, Titirangi MP David Cunliffe, said concerns about hydro spills, transmission constraints and customer service demonstrated the need for an improved regulatory framework.

The Electricity Industry Bill, which the committee will report back to Parliament next month, will establish a regime that will rely on self-regulation as the first line of defence. It also allows for intervention in cases of market failure.

The committee said it was concerned about the amount of water being spilled over hydro dams without generating electricity, with Meridian owning up to 1300 GWh of potential generation lost for that reason in the 10 months to February.

While Meridian has said transmission constraints stopped it from getting power north to Auckland when Otahuhu B was out of action last year, it said intense weather events combined with reservoir constraints were the main reason.

The committee said it had concerns about the potential amount of electricity generation lost through hydro spill and its potential effect on economic efficiency and the environment. The concerns included New Zealand's ability to meet greenhouse gas emission targets to be set up by the Kyoto Protocol.