Dialogue: Past time to get properly plugged in

Such is the shambles today that the power boards of yesteryear now seem paragons of efficiency and good management. The quest for competition in power supply has produced not the promised lower prices, but tales of poor service, lengthy delays, disconnections and bills that are either wrong or non-existent.

As this week's Herald series has revealed, the cause for complaint is real and the cases far from isolated. Those who cherish competition after favourable experiences with the likes of airline and telephone companies now hesitate to switch their electricity retailer.

How could it have gone so wrong? Much of the reason undoubtedly lies in the frantic rush to introduce competition. Then-Energy Minister Max Bradford, with an election looming and after the failure of earlier efforts to deliver cheaper power to households, laid down the tightest of deadlines. But power retailers accepted the challenge with relish.

It did not take long for it to become apparent that many of their billing and computer systems were not up to the task. And when consumers cannot switch between companies quickly, cheaply and at will, competition is a fiction.

But the industry cannot lay all the blame at Mr Bradford's feet. The technical difficulties were compounded by their own obstructive practices. Good profit margins were reason enough for some companies to frustrate customers who wished to switch to a rival. The absence of switching protocols eased the way for such tactics.

As well, the line companies created last year were barely constrained in their ability to charge monopoly rents. Mr Bradford was ready to regulate them, by putting a lid on their charges, just a few months after forcibly separating them from customer services. But the necessary support from the Labour Party was not forthcoming. Labour wanted to hold its own review.

That review has been done and the outcome forms the basis of the Electricity Industry Bill, which is expected to become law in March or April.

This is the Government's recipe for returning order - and consumer faith. The emphasis is on the industry sorting out its own problems and is backed by the threat of regulation.

An electricity governance board - set up by the industry but with a majority of independent members - will have to agree on rules and protocols, and the industry must install an ombudsman and offer a cheap fixed-rate tariff for consumers who use little electricity. The Commerce Commission will be given power to force line companies to cut prices if they exploit their monopoly positions.

If some of the measures are designed to deliver order out of chaos, others do little more than acknowledge present inadequacies. An electricity ombudsman, for example, is a backstop, not a solution.

Other countries have tackled electricity industry competition quite differently. Britain, in this and other fields, has used regulation widely to replicate as far as possible the effects of competition by enforcing higher service standards and restrictions on prices.

While regional power companies' local monopolies were progressively reduced, regulation acted as a temporary substitute for competition.

New Zealand's approach has been far more hurried and haphazard - and, inevitably, far less successful. The latest prescription should not be an open-ended invitation.

Such is the public disquiet that if self-help does not produce major improvement within a year, the Government should act. In all likelihood, line companies, as natural monopolies, will definitely need close regulation.

As always, consumers stand to benefit from competition. Even in this most imperfect case, power bills would have dropped 4 per cent if all consumers had switched to the cheapest supplier in their area. Right now, however, they cannot be blamed for switching off such thoughts.