We should all ask for a $1,000 refund

Pardon the pun, but I'm still in shock. I've just read the conclusion of the Commerce Commission's investigation into the electricity market here . Luckily I don't have a Taser or I'd want to use it on someone in the electricity industry.

The Commerce Commission says the four big power suppliers, Contact, Meridian Energy, Genesis Energy and Mighty River Power, used their market power to overcharge customers so much that they gouged an extra $4.3 billion in profits between 2001 and mid 2007. Let that factoid sink in for a moment. They overcharged us to the tune of about $1,000 for each man, woman and child in New Zealand. Just imagine what you could have done with that $1,000.

Prices were 18 per cent higher than they needed to be, says the Commerce Commission. This chart here shows that retail electricity prices rose by around 8 per cent each year between 2001 and 2008. This was when consumer price inflation was running at around 2 per cent. No wonder the Reserve Bank Governor Alan Bollard has been grumpy. It turns out he has a right to be furious, just like the rest of us.

They could still be overcharging us.

How does it feel? Think about it. As you read this on your computer with the light on and the heater running next to you, one of those companies is charging you at least 18 per cent more than they need to in order to make a reasonable profit. You could use that money to buy food or pay off debt or pay the phone bill or even turn the heater up a bit to take the chill off the cold. Or maybe you decide to turn the heater off because it costs 18 per cent too much. Maybe your elderly relative will decide not to put the heater on and get sick this winter because it costs at least 18 per cent too much.

Remember this when you see an ad on the telly for Genesis Energy with a Pukeko strutting around telling us how clever it is. Remember this when you see another ad on the telly with a Tui telling us how lovely and warm it is. Remember this when you see Contact issue another strong profit result or Meridian/Mighty River/Genesis report another big dividend to the government.

The worst thing is that we can do nothing about it right now. The Commerce Commission says that even though it found these companies had used their power to generate these excess profits it could not prosecute them. Instead it was referring the matter to Gerry Brownlee's Ministerial Review of the Electricity Market to fix.

He'd better get on with it. The Bradford reforms of the late 1990s clearly failed. We need to move on and find a way to castrate or wrangle or suck the monopoly juice out of these companies. We should throw things at the telly next time we see another pointless, money sucking ad. They have some cheek.

In the meantime we should all demand a refund of $1,000 each from the power companies.

It would only be fair.