Opinion: So, here we are again. For another winter, lake levels were low and power prices on the wholesale electricity market – that supposedly efficient solution for keeping the lights on – skyrocketed. You could almost set your watch by the frequency with which sagas relating to our electricity system have hit the headlines during the past 30-odd years.
In the usual course of events, government ministers furrow their brows, point their fingers at a regulator or two, and trot out variations of the theme that we just need to increase competition. Latest ructions have seen “find more gas” added to the list of refrains and the government has confirmed its intention to reverse the ban on oil and gas exploration in an attempt to achieve this.
Every so often, when the evidence of problems gets hard for folk in the Beehive to ignore, the state of the electricity system sparks another inquiry. The last one wrapped up in 2019. In between, consumers are lectured that they should “shop around” for the best power deal to keep their bills down.
Despite all the frowning and finger-pointing, and the money thrown at inquiries and lecturing hapless consumers, nothing much seems to change. Except that prices keep going up – 3.5% in the past year – and rather nice profits keep being recorded by power companies.
Many power customers may well agree with Associate Energy Minister Shane Jones’s recent swipe that the companies are “profiteering”, even if it’s the only thing they ever agree with the honourable minister about.
The irony, of course, is that three of the big four power players – Genesis, Mercury and Meridian – are majority-owned by the government, which seems more than happy to lap up the annual dividend payments it gets as a result of this alleged “profiteering”. And let’s not forget the tragi-comedy that is grid manager Transpower, which also delivers the government a dividend, paid for courtesy of electricity consumers.
According to Treasury figures, Transpower and the electricity companies contributed the lion’s share of the $607 million paid in dividends to the government in 2022. That’s the equivalent of about $300 from every household.
We’re told to expect power prices to keep rising, not only as the consequences of constrained supply flow through to consumers’ bills but also as lines companies increase their spending.
The Commerce Commission recently released proposals that would see lines companies and Transpower able to hike their revenue to a combined total of $17.8 billion over the next five years. Starting from April 2025, this will add about $15 to households’ monthly power bills. Happy days. If the consequences of all this weren’t so dire, you’d be tempted to laugh at the seemingly convoluted and costly way we’ve come up with to deliver power in a country with just five million people. But there’s nothing much to laugh about when you know many households shiver through winter because they can’t afford to turn on the heater.
Alas, if there was a medal to be won for designing a power system that delivered affordable, reliable and renewable electricity, New Zealand would be a fair way from the podium.
The old saying goes that it’s a sign of madness to keep doing the same thing over and over and expecting a different result. Unless we change the rules of the electricity game, we appear destined to keep seeing the same headlines. The brow-furrowing and finger-pointing will continue. And many households will still be shivering through winter.
Jessica Wilson is a researcher and writer who works on consumer law and other issues. From 2022 to 2024, she was a board member of the Consumer Advocacy Council, which was disestablished by the government in June.
