Opinion Editorial: The Electricity Pricing Review

The Electricity Price Review expects to release its first report tomorrow, Tuesday 11 September at 1pm.

Ahead of it's release, Brendan Winitana, Chairman of SEANZ, the Sustainable Energy Association of New Zealand, discusses the issues the review must address.

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The Electricity Pricing Review- Hopes and Aspirations

This week the Electricity Price Review panel will publish its first report. Ahead of its release Brendan Winitana, Chairman of SEANZ, the Sustainable Energy Association of New Zealand discusses the issues the review must address.

Electricity companies; retailers, generators, and lines companies alike, the sector holds a special place in the hearts of New Zealanders. A 50 per cent rise in power prices since 2000 has ensured that it’s a cold and dark place with only parking wardens and real estate agents for company.

When Energy Minister Megan Woods announced the review to ensure kiwi households are getting their electricity at a fair price many could be excused for getting a little excited.

Those of us who have been challenging the structure of the electricity market were happy to hear the Minister wants to ensure the market is fit-for-purpose in light of the rise of emerging technologies such as solar power and electric vehicles.

Could this be the last great electricity review?

When combined with the additional goals of driving New Zealand to achieve 100% renewable electricity generation, ensuring fair and equitable pricing, and potential rationalisation of the network, it means the review panel has certainly got its work cut out.

We’ve seen these reviews before, so the big question is whether we are going to get the same answers to the same questions this time around, or if we are ready to put vested interests to one side to get the best outcome for everyone. So far it looks very much like same-old: same-old if the composition of the review group is anything to go by. There is very little representation of new technologies, or those with new business models and disappointingly only one representative for consumers. That’s the group impacted most by energy poverty and rising prices and with the most to gain from new technologies. There appears to be little room for the much needed atmospheric thinking where creativity and innovation can provide key answers and enable transitions and momentum to occur.

Some specifics the review has to cover:

• electricity costs by different consumer groups,
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• the Low User Fixed Charge
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• barriers to competition,
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• the role and value placed on new technologies such as solar and batteries in light of the impact of vehicle-to-grid demands,
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• the role of regulators,
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• the role and operation of lines companies, retailers and gentailers,
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• sector profits.
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With 29 lines companies and 41 retailers there has to be room for system rationalisation to remove costs. What place is there for mini and micro-grids and the consumer-orientated peer-to-peer model? What are the barriers to these? Do we have the will to remove them?

And a big question, addressing the elephants in the room; will the review identify who’s making too much profit? Will the review result in cheaper retail electricity?

The short answer? It’s hard to say. At the same time the Government wants to understand whether hardworking kiwis are paying too much for electricity, it also wants to ensure that our electricity infrastructure “does what it says on the tin”. In other words is resilient, fit for purpose and able to withstand more frequent storms and weather events. This unsurprisingly requires investment, typically paid for by consumers.

The sector has to get the balance right between delivering a reliable and secure supply of electricity and avoiding wasteful expenditure on infrastructure that might not be needed in the long-term as new technologies increasingly come into play.

New technologies and new business models allow a rethinking of the grid. Instead of a one-way pipeline it should be opened up to allow true competition – think of it as an electron commons. Multiple projects trialling new models like peer to peer networks, mini and micro-grid development, and solar electricity aggregation are in play already around the country. Hundreds of thousands of EVs with two-way vehicle to grid capability will really throw the proverbial cat amongst the pigeons.

Globally, the growth trends for disruptive technologies are exploding. Across the ditch 1 in 4 houses now uses solar and/or solar and batteries. They are consumer driven, so a market with fair, equal and non-threatening rules that allows others to compete in what until now has been a relatively closed market is paramount. That’s both a policy and social equity requirement.

With the continued price decline of new technologies like solar and batteries, the price consumers pay for energy will drop one way or another. What is at stake here is the opportunity to accelerate growth in our economy on the back of low cost, clean, green, sustainable energy in a way that benefits everyone, not just the chosen few.

Is a 100% renewable, more resilient grid with lower more equitable electricity prices possible? You bet! Can this electricity review create it? We’ll soon find out.

ENDS

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