Comalco chief blasts power reforms

By RICHARD BRADDELL

WELLIGTON - "Pigs in clover," was the phrase that came to mind when considering electricity lines company directors, according to Comalco's chief executive, Kerry McDonald.

But if that was so, he was not blaming them for their position. Addressing the electricity inquiry in Wellington yesterday, Mr McDonald said the failure of the policy framework had delivered lines company directors with a very real conundrum as to whether they simply maximised profits for their shareholders or took a more balanced and even-handed approach.

"We do think it is important that the line and retail issues are satisfactorily addressed because while there is consumer dissatisfaction, particularly household consumer dissatisfaction with key aspects of the industry, the industry is unstable and the policy environment around it is seen to be unstable," he said.

In what amounted to a broadside on the quality of electricity reform, he said the lines companies had been given monopoly rights and near unfettered ability to revalue assets that would justify higher returns.

"There was very little discipline either by the audit process or any process of transparency to impose any constraint on the lines companies," he said.

But Mr McDonald had praise for the operator of the national grid, Transpower, which he said had improved considerably with the help of a new board, statement of corporate intent, pricing and grid security processes.

"We think Transpower, provided it is operating efficiently, should be the core body operating most of the non-contestable or monopoly services in the industry," Mr McDonald said.

"If the lines businesses hadn't been privatised and transferred to private property rights, there would be a very good argument for Transpower to be extended right down [to the lines companies] so that you had a concentrated single monopoly entity which can be very tightly controlled and regulated."

He also condemned the structure of the wholesale market which he said had been designed by the generators with no input from consumers.