5 June 2013

Electricity Authority has failed to control electricity prices

The National Party-created Electricity Authority has failed to control the unjustifiable rise in electricity prices and has crossed a line by entering into political debate in an attempt to cover for its failure, Green Party Co-leader Dr Russel Norman said today.

The Electricity Authority’s National-appointed chairperson, Dr Brent Layton, entered the political debate today with a speech attacking the Green and Labour Party NZ Power plan to bring down power prices.

Under the NZ Power plan, the economic ‘rents’ that owners of low-cost hydrodams currently make by selling their electricity at many times its cost of production will be eliminated, saving $700m a year for families and businesses. The saving of $300 per year per household is comparable to the rise in the average household power bill under National. The Electricity Authority will be folded into NZ Power under the reforms.

“Dr Layton’s extraordinary foray into political debate is nothing more than a National Party-appointed civil servant who has failed to do his job and is now trying to protect his patch,” said Dr Norman.

“The average family power bill has risen by over $150 in just two years since National created the Electricity Authority and made Dr Layton its chairperson, and by $300 since National came to power.

“National’s Electricity Authority has been singularly unsuccessful at controlling electricity prices, which have risen at twice the rate of inflation since it was created. That’s the same excessive rate of increase that Kiwis’ have had to deal with since National’s disastrous reforms in the 1990s.

“It is out of step for a state servant to engage in political debate. Normally political appointees leave their colours at the door. Dr Layton’s comment that he would not work for a Greens-Labour government shows a lack of political neutrality that is unfitting of a state servant.

“Dr Layton’s speech displays a worrying lack of understanding of the electricity system when he says that the owners of cheap-to-run hydrodams don’t make excessive profits. A plethora of studies show that the hydrodams are cheap to run but, because they get the same price as the most expensive fossil fuel plants for their electricity, they make huge profits.

“The rentier profits that electricity companies are making is a stealth tax on the economy. Every household and every business is paying more than it ought to for power so that electricity companies can pay fat dividends to the Crown and overseas owners. I wouldn’t have thought it was the role of the Electricity Authority to defend the profits of electricity companies.

“Dr Layton has clearly failed to do his research. He should look overseas to the dozens of countries and jurisdictions where NZ Power-type models work successfully. He could even look to New Zealand’s history before National’s disastrous reforms in the 1990s, back to when ECNZ and the Electricity Department ran internal single buyer models and our electricity was amongst the cheapest in the developed world.

“The choice for New Zealand is simple: we can stick with National’s broken electricity market and pay more for some of the world’s least expensive power, or we can choose another model, the one that works around the world, and will deliver lower power prices for Kiwi families and businesses,” said Dr Norman.

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