Between the lines : Power to them all - except consumer

BY RICHARD BRADDELL

Few would argue that the past decade of electricity reforms has been an unqualified success. From the bungled reforms of the early 1990s to last year's split of energy trading from the distribution networks, one rather important group has missed out - consumers.

But as John Field, chief executive of d-Cypha, an obscure if important back office player, told the Government's electricity inquiry in Wellington on Monday: "We believe the inquiry is bringing a new perspective - that is the customer."

There is a lot wrong with the industry. Governance structures are confusing. And hopeless arrangements for switching consumers from one retailer to another have spun the process out and often resulted in bills being presented months late. Worse, customers have been cut off through no fault of their own.

And slim profit margins make it hard to see why retailers could want to compete for many customers, unless they happen to be generators wanting to hedge customer bases against their production.

For a large part, the owners of monopoly networks - the line companies and Transpower - are seen as villains of the piece. But opinions differ on how they should be brought into line. The Consumers' Institute wants the imposition of a regulatory cap on line company charging.

The line companies see the answer to inappropriate behaviour on their part as being in the development of self-regulating structures, including codes of conduct supported by an industry ombudsman and backstop regulation to deal with non-performers.

Cynics might argue that the approach is self-serving. And maybe it is. But the inquiry itself seems to have come as a relief. Headed by former Labour finance minister David Caygill, with support from expert Stephen Kelly and former Commerce Commission chairwoman Susan Wakefield, it has been welcomed as an opportunity to introduce order into the ad hocery of the past.

High on its list of recommendations might be following the advice of many this week and putting the ownership and reading of electricity meters into independent third-party control.

The oversight that allowed retailers to buy the meters has done little to hasten customer switching. And it is a barrier to cost-saving remote meter-reading technologies.

But not everything has been an unqualified failure. The wholesale end of the market works well. And many of the downstream gains would have taken time to capture anyway because billing and call centre structures had to be established after last year's split of line and energy companies.

Those changes are bedding in. But estimates of efficiency gains still to be captured are large - perhaps $100 million annually. Here's hoping consumers see some of that.