Power Corrupts

The latest edition of the Listener has an article entitled Cold Comfort, which is all about New Zealand’s high electricity prices and how they contribute to ill health. It makes for sober reading, especially when considering that the continuing trend of high electricity prices and low incomes is going to make things a lot worse.

It's estimated that 400,000 New Zealand homes are not adequately heated, because the inhabitants live below the fuel poverty rate where warming a home eats up more than 10% of a households income.

But what pisses me off the most is the huge increase in the cost of electricity over the last few years when we have an abundant and cheap supply. In comparison to the initial expenditure on infrastructure, there has been very little spent on maintenance or upgrading the system.

The University of Otago found that electricity prices have risen by a whopping 87% over ten years to May 2011. Lead author of a report quoted in the Listener article, Philippa Howden-Chapman said that cold homes probably play a role in an extra 1600 deaths each winter. The report showed that countries with much colder climates do not have as high a mortality rate as New Zealand.

“We found that fuel poverty is a major issue in New Zealand, particularly for people on low incomes, and it’s a problem that’s growing,”  Philippa said.

The Listener article written by Ruth Laugesen goes on to say that the jump in fuel poverty in New Zealand appears driven by a troika of causes – low incomes, rising electricity prices and New Zealand’s crummy, badly insulated housing stock.

"We’ve had several instances of homes we’ve visited where the children are away [from school] as much as one or two days a week on average. They’re spending $300, maybe $400, a month. Their house still isn’t particularly warm, but it’s getting mouldy because it’s damp and slightly warm. They’ve got these huge power bills and they’re really at their wits’ end,” said Sarah Free, a senior energy adviser for the Sustainable Trust.

Despite the unarguable truth of the situation, Associate Minister of Energy and Resources, Hekia Parata just had to try and put a positive spin on things:

“Competition in energy supply provides choice to consumers and places downward pressure on prices. The reforms make it easier for more electricity retailers to operate across New Zealand, so customers have more choice of providers,” Parata said.

What a load of codswallop! This is what National did:

• Meridian Energy, Genesis Energy and Mighty River Power had a virtual asset swap.
• National required all major electricity generators to put in place an electricity hedge market, to help commercial consumers to get even cheaper power.
• National established a $15 million fund over three years to promote customer switching between retailers.
• National abolished the Electricity Commission and replaced it with a slimmed-down Electricity Authority.

None of these things gave New Zealander's cheaper power... In fact the article states that household electricity prices rose by 4% more than inflation each year in the decade to 2010.

Market reforms have been all about getting the SOE's ready to sell and giving commercial consumers even cheaper power, at the public's expense.

Increased price of electricity for the public.