9 July 2004
Media Release
The Potential For Business To Subsidise Low Electricity Users Unfair
The Government’s plans to force electricity companies to give a subsidy to consumers who use less than 8000 kilowatts
is “a back door way of potentially hitting business with a price differential, or forcing electricity businesses to
carry the cost.” said Auckland Chamber of Commerce Chief Executive, Michael Barnett.
It is poor social engineering for at least two reasons. Firstly, there is no assurance that the scheme will help low
income users. Apartment dwellers will clearly benefit through having smaller properties and power usage, but most of
these occupants are in high-income groups. However, many low-income families in stand-alone houses tend to comprise
large family groups and therefore are higher users and therefore won’t benefit from the subsidy.
Secondly, expecting the electricity companies to carry the cost of the subsidy on the bottom line is a blunt instrument
that will distort the market and their performance.
Most domestic customers in Auckland use less than 8000 kW, and the outcome will have the potential for productive
businesses to be treated as a cash cow to subsidise unproductive sectors.
“Economically and politically, this is a form of price fixing that will over time distort the economy and need
correcting,” said Mr Barnett.
ENDS