Herald on Sunday editorial: Cold comfort in power prices

In return for being responsible with our water and power usage, power and water cos should ration price hikes unless they are able to provide us with transparent justification. Photo / Thinkstock

Those few who are old enough to remember World War II will recall the long days of rationing, and how our cities and towns tightened their belts for the greater good and Mother England. An adult was allowed 2 pounds of meat a week, and 8oz of butter.

Only one thing can come close to eliciting such community-minded restraint today: A Big Dry. It is only when the summer sun blazes on brown lawns that New Zealanders will, again, grit their teeth for the good of the nation and turn off the sprinklers; it is only when the South Island hydro lakes run low in winter that we will conserve power.

We cut back on electricity in 1992, when street lights were dimmed and households endured hot water restrictions.

Then, during the long dry summer of 1997/98, we stopped washing our cars and, perhaps, flushed the toilets a little less often.

We saved power again in 2008, when we were urged to wash dishes by hand and turn off lights and heated towel rails. Pensioners - yes, those who remembered the war - turned off their bar-heaters that winter and shivered beneath rugs instead.

For the most part, we did it with good grace. We accepted that deep-running rivers and hydro power, which once seemed so abundant, were in fact finite resources like any other.

Many New Zealanders have invested in conservation: big rainwater tanks for summer, or solar panels on the roof. We do it because we know we're all in this together.

But do our big power and water companies feel the same way? During the power shortages, we saw generation companies hike power prices and turn a profit. The Herald on Sunday revealed this month that New Zealand power prices have risen at more than twice the rates of those in other countries over the past 30 years. Perhaps worst of all, we report today (p31) that Meridian Energy is slashing the price it pays to conscientious home-owners for the renewable power they feed back into the national grid from their solar panels.

It's not just a rapacious thirst for profit that drives the price rises, either. Watercare has been hiking its charges for metered fresh water and wastewater in Auckland, even though it is not required to return a dividend to the Auckland Council. In the coming year, Watercare plans to spend $342 million of that revenue on Auckland's water supply and wastewater pipes instead.

The power and water companies will answer, yes, they are pitching in with the rest of us to help conserve our nation's water. They will argue the price hikes are justified, necessary even. And they will assure themselves that, like caring parents rationing pocket money, they are teaching us the real value of our water.

But New Zealanders don't need such paternalistic supervision. We know the value of our lakes and rivers, and that can't be counted in dollars and cents.

Successive governments have regulated and deregulated our power and water supplies. They have veered between the wholesale power price controls of the early 1980s, and manufacturing competition between publicly-owned suppliers in more recent years. Now, this Government wants to sell off shares in four of the power generation companies.

None of these solutions have constrained, or will restrain, power and water price increases - and more effective solutions may be publicly unpalatable.

Perversely, increased demand from the residents of faster-growing cities like Auckland and Tauranga could help. With more people living in higher-density housing, the cost of hooking them up to power and water becomes proportionally lower for each household - but few of us aspire to live in inner-city tower blocks.

The OECD nations with the cheapest electricity, Korea, France, Mexico and the US, all use nuclear power plants - but few in New Zealand want to embrace that technology.

So, without resort to draconian price controls, the best we can hope for is a more honest relationship between consumers and suppliers. And here's the deal.

We'll take responsibility for rationing our water and power usage when times are tight.

The power and water companies should, in return, ration their price hikes unless they are able to provide householders with transparent justification. We're not there yet.