KEY POINTS:
A coalition of consumer, farmer and business groups is urging the Government to conduct a thorough and wide ranging review of the electricity market.
Earlier this week the Government said it wanted to scrutinise Contact Energy's decision to hike power prices by 10 per cent or more.
Commerce Minister Lianne Dalziel and Energy Minister David Parker said they would raise the issue with Cabinet and seek a broad inquiry.
The Commerce Commission and Electricity Commission are considering the adequacy of competition in electricity markets.
In an open letter the Consumer Coalition on Energy, which comprises Consumers NZ, Business NZ, Federated Farmers and the Major Electricity Users Group said there was no doubt a more comprehensive review of the whole electricity sector had been needed for some time.
"The current reviews by the regulators are useful, but they only deal with some of the key policies affecting the sector. We suggest Government should continue to support the work and reviews of both commissions; at the same time though it should commence a more comprehensive and broader inquiry," the coalition said.
"A properly designed and executed review will be worth the effort. A review taken for expedient political reasons will not."
The coalition said the scope of a broader inquiry needed to consider if the needs of consumers to have lowest possible prices, innovation from service providers and security of supply were likely to be met from:
* Policies in the New Zealand Energy Strategy;
* The recently enacted ban on new thermal generation;
* Continuance of the Electricity Commission as a (non-independent) crown entity;
* The ability of the Minister of Energy to effectively dictate Electricity Commission priorities by issuing revised government policy statements;
* Improving accountability of the SOE generators to be more akin to that of listed companies; and
* The impact of the New Zealand Emissions Trading Scheme applying to electricity generators from 2010.
The coalition said the reviews already under way did not examine any of the issues above.
The review also needed to be properly resourced and independent.
- NZPA
