John Collinge: No place for power play

Auckland Energy Consumer Trust chairman Warren Kyd has attacked the Commerce Commission, saying that the trust cannot sit on the bench in the matter of the commission's intention to consider price control of Vector.

By an Act of Parliament, the Commerce Commission is rightly granted oversight of monopolies, including electricity lines. After all, someone has to protect the consumer.

Notwithstanding, Kyd goes for the jugular. He describes the commission's chairwoman as highly misleading. He accuses her of acting hastily without considering the issues. He says her heavy-handed regulation has had a chilling effect, and that she has bashed Vector over the head and publicly threatened Vector.

Kyd also says that the commission has failed to grasp the Government's wishes and created a climate hostile to investment.

All this is palpable nonsense. It is a highly emotive reaction. Kyd attacks the person not the issue. He unwisely attacks the decision-maker, the entity with the power, and belittles members of the commission despite their acknowledged capability.

Kyd's claim that the chairwoman has been highly misleading is incomprehensible. Whatever is ultimately decided, the commission's paper is careful and considered.

The points he makes in opposition to the commission are no better: price control has not been imposed, as he alleges; the commission has introduced a paper to invite submissions.

There has been no peremptory strike by the commission and the issues have been around for a long time now.

If price control were ultimately imposed, there would always be an allowance in any pricing decisions for necessary or desirable capital investment.

Suggesting that such capital investment would be discouraged is nonsense. It is for the company to argue each case on its merits.

In price control cases, the need for capital investment is usually a central issue, and one that has invariably been taken into account by previous regulators.

In other reports, Kyd has said that if we have our charges cut this will become a totally profitless company and that we are going to have to cut back on certain things on which we spend money.

However, the commission at present accepts a return of 7.35 per cent on capital.

It is simply not productive to start name-calling or making threats against the entity which has the power.

No public body could conceivably allow its processes to be affected by blackmail or threats. Any attack - especially a petulant one - on the regulator can only be counterproductive. Vector shareholders would see their investment devalued by such an approach - likewise the value of the energy trust's Vector shares.

What is necessary is attention to the issues in a calm and rational way. For example, Auckland, Manukau and Papakura consumers, the people, have built up the value of their electricity lines since 1922.

Under the old Auckland Electric Power Board the policy was to keep prices as low as possible using the advantages of a relatively compact area - in that way the consumers received their dividend.

Why are they not entitled to some advantage over their Wellington counterparts? Why should other consumers have equality of treatment simply because they were taken over recently?

Further, why are domestic consumers in Auckland, Manukau and Papakura not entitled to a better price than commercial consumers? Their supply is interruptable. It is a different product. They may not have such expensive installations. They do not have the benefit of tax deductions for their power.

Most on the trust have endorsed a rebalancing which would see prices for domestic consumers in Auckland, Manukau and Papakura rise by about $165 a year over four years - an increase in line charges of 8 to 9 per cent a year, or 33 per cent, over four years.

Kyd purports to speak on behalf of all on the trust. He does not. I dissented from the price rises and disagree strongly with the approach now taken against the commission.

Why such a bizarre public outburst and public squabble when a rational debate is called for? Well, an election for five Auckland Energy Consumer Trust members is about to be held, starting on October 15.

There is no place for electioneering of this sort on the subject of our power supply. Let the trust abandon its nonsense and let us keep the lights on.

* John Collinge is a former chairman of the Commerce Commission, a former chairman of the Auckland Electric Power Board and a member of the Auckland Energy Consumer Trust.