Federated Farmers has described the current regulations for protecting electricity consumers against the misuse of
market power as "woefully inadequate". Federated Farmers energy spokesperson Tom Lambie was giving the federation's
verbal submission to the Ministerial Electricity Inquiry.
"Rural areas are particularly vulnerable to the misuse of market power in infrastructural industries such as electricity
and telecommunications," said Mr Lambie. The federation requested that the Government develop and implement a robust
method of price control on monopoly lines businesses as a matter of urgency.
The federation also wants quality standards within the industry regulations.
"Minimum quality standards are a fundamental customer requirement that should underpin the regulatory regime. It is
essential that the regulations recognise varying standards of quality and system security."
Information presented to the inquiry by Federated Farmers showed that the average cost of line charges to a medium usage
domestic consumer varied by between 2.6 and 7.04c per kWh. For a medium commercial user, the range was from 1.87 to
8.57c per kWh.
Trend analysis showed that there was no consistency between price and factors such as profit, consumer density, size of
business, or service quality. The conclusion clearly pointed to line companies operating in a non-competitive
"Federated Farmers also made a strong request for the inquiry's recommendations to include effective mechanisms for
timely and seamless switching of customers between competing retailers," said Mr Lambie.
"It is the quality of physical infrastructure in rural areas that will be a key factor driving the level of productivity
in agricultural industries, and thus in New Zealand's economy as a whole," he concluded.