Householders are losing out as ‘unjustified’ wholesale prices cause a wave of power company closures, a group of independent power retailers have told the Electricity Authority. 

Four independent electricity retailers have laid a joint complaint with the sector’s market regulator over prices they say are “threatening the very existence of independent competition”.

Industry sources said three more independent retailers are set to close next week, as they battle record wholesale electricity costs.

The new wave of expected closures follows the news that Dunedin’s Payless Energy will stop selling power, and the announcement from Nelson-based Powerdirect that its customers should switch to another provider.

Fellow independent retailers Pulse Energy, Electric Kiwi, Vocus Communications and Flick Electric have complained to the Electricity Authority that the current high spot prices set by the generator-retailers (the ‘gentailers’) are neither transparent nor justified.

The situation has collapsed liquidity in the hedge market and is threatening their existence, the independents said.

“The big gentailers have been ripping off Kiwi families for decades and will continue to unless they are made to change their practices,” said Vocus head of regulatory and commercial, Johnathan Eele.

“We and other smaller players have worked hard to drive competition in the market, while the gentailers continue to make massive profits thanks to questionable spot market pricing.”

Average spot prices for most of last month were $300 per MWh, the highest October monthly average in seven years. These sorts of prices are more common during winter months in unusually dry years, the Electricity Authority (EA) said.

The high wholesale prices are due to a double whammy of lower than normal lake levels and reduced gas production, the authority says.

Lake levels are now in the lowest 10 percent of historic storage levels. At the same time there have been restrictions on gas production due to equipment problems at the Pohokura gas field since late September, it said.

But the four independent retailers serving a combined 148,000 customers say the current high spot prices can’t be justified. 

“The prices were seeing in the market are a disproportionate response to the supply implications,” Electric Kiwi CEO Luke Blincoe said.

The gentailers are also not meeting their obligations around disclosure about what’s happening with gas supply.

“The lack of transparency and integrity in the wholesale market undermines competition, which means Kiwis miss out on deals,” he said.

The four retailers have lodged an Undesirable Trading Situation Claim for urgent consideration by the EA.

The authority needs to step up, Blincoe says. “By allowing current conditions to go unchecked, the EA is failing to regulate this sector with the independence and vigour necessary to fulfil its responsibility for promoting competition and the interests of consumers.

“This inaction undermines confidence in the market, and ultimately demonstrates market failure.”

The independents’ action comes as the government conducts a review of household electricity prices, which have increased faster than inflation for many years.

The review is investigating whether the electricity market as it stands is delivering fair pricing to end-consumers.

It will look at whether current market structures will be appropriate with rapidly changing technology and new innovations in the sector.

It may lack the sex appeal of a brand new city-centre build, but Mt Smart is Auckland’s rock star venue in waiting, writes Mark Thomas.

An “orphan” is how the office of the auditor general described Auckland’s Mt Smart stadium in its critical review of a failed David Beckham-starred event in late 2008.

A decade later supporters of the venue in the industrial area of Penrose must wonder if its standing within the Auckland Council family has improved at all, as talk of a new stadium for the city revolves around a glamorous waterfront location.

But the truth is, in an average year Mt Smart is the country’s busiest stadium venue. It hosted more than 450,000 punters in 2017; the country’s so-called national stadium Eden Park hosted 397,300, and that was boosted by the Lions tour from its more typical 375,000 level. New Zealand’s second busiest stadium was the Westpac stadium in Wellington with 424,000 attendees.

Mt Smart is the country’s largest concert arena, which provides the bulk of its patronage. But in addition to this “rock star” status it also had the highest number of regular attendees of any Auckland stadium in 2018 with 17,500 weekly rugby fans during the NRL season.

Mt Smart is clearly a significant part of both the Auckland and New Zealand stadium landscape, so it’s puzzling that it is consigned to high performance training and community event status in the Auckland stadium development plan released in May.

Presumably Mayor Phil Goff’s million-dollar secret report has some insights on this, but happily international experience can tell us quite a bit.

A 2014 report by the home of soccer in Europe, UEFA, observed an increasing trend away from more expensive CBD stadium sites to locations on the outskirts of cities.

A KPMG study around the same time said in recent years most new stadiums have been located away from city centres. In the first 12 years of the millennium, 100 stadiums were built in Europe: 55 in semi-urban locations, 37 out-of-town and only 8 in the CBD.

The UEFA report went on to say that extending an existing venue to boost capacity can be more financially viable than building from scratch, and that local sporting clubs or national organisations may choose to refurbish because new site acquisition and development cannot be funded.

Downtown rejuvenation is an acknowledged argument in favour of a central city stadium, and existing stadium refurbishments do not always end up cheaper in the long run. But the 160-page study said it would be wrong to conclude one option is better than the other and that all options should be properly evaluated.

Auckland’s stadium discussion is not being led that way.

Mt Smart has none of the neighbourhood challenges a CBD stadium would have. At 11km from the city centre, it is well served by public transport, as more than 134,000 people discovered when they set a New Zealand record getting to Ed Sheeran’s back-to-back concerts in March. The surrounding area is ripe for mixed-use redevelopment to help maximize commercial opportunities.

But it’s fair to say it lacks sex appeal and, despite the Mad Butcher’s fanaticism (which likely helped the Warriors secure a contract extension at Mt Smart when faced with an exit), it lacks a city-wide advocate.

Early this year, an Italian sports company reported on the seven best stadiums to open in 2017. Five of the seven are refurbishments or new builds on existing stadium sites and only two were on brand new locations. Five are located between 6km-12km from the city centre and just two are central.

The three largest stadiums were all built on existing sites. Of these, Atlanta in the USA and St Petersburg in Russia were the most expensive at $1.6 billion (80,000 capacity) and $1.1 billion (68,000 capacity) respectively.

The Metropolitano in Madrid was a refurbishment from a 20,000 seat facility to 67,000 seats together with a roof – at the comparative bargain price of $270 million.

None of these seven cities are on any of the world’s most liveable cities lists, as Auckland is. Was this an attempt to boost their rankings? If so, they will be disappointed to hear the news from Perth.

Perth, ranked one of the Economist’s top ten most liveable cities, opened a brand new 60,000 seat multi-purpose stadium in January (at a cost of $1.7 billion, 8km from the city centre) and promptly lost its top ten crown.

It actually fell even further than Auckland which also dropped out of the top ten for the first time since 2010. This had little to do with any failure to build a new stadium, but rather because cities like Copenhagen, Osaka and Sydney overtook Auckland with (earlier) transport and safety investment.

Two of Auckland’s other liveable city peers have previously either redeveloped or rebuilt existing stadiums. Copenhagen’s national stadium (capacity 38,000, 5km from the city centre) was built on the site of the former national stadium 26 years ago, and even back then the design included a retractable roof.

In Vienna the national stadium (capacity 68,500, 9km from city centre) was first built in 1931 and renovated most recently in 1986.

None of these liveable city stadiums are in the heart of their cities.

The desire to build a “world class”, iconic stadium in a central setting seems to be driving both the council strategy and the recent privately sourced waterfront options.

It is true that stadiums can be visually appealing to look at, as can motorway tunnels (the Waterview Connection won one of the Designers Institute’s best design awards this year). But more important than looking good is being suitable for the location, not to mention the budget.

International publication Design Curial updated its 10 best-designed stadiums in the world at the start of the year. Although cities in Azerbaijan, North Korea and the United Arab Emirates featured with beautiful looking venues, again none of Auckland’s contemporaries in any of the world’s most liveable cities lists appeared.

Without a “world class” stadium and despite a network of venues described in council documents as not ideally located and delivering sub-optimal facilities, Auckland was declared the third best city in the world for sports events by London-based SportBusiness in 2014.

Last year, it won gold and silver awards at the prestigious Sports Business Awards global competition for its hosting of the Lions and the World Masters’ Games – including beating Manchester, which opened a brand new stadium 14 years earlier.

Could a new stadium become a new inner city “icon”? Maybe, but in an already iconic setting such as the Waitematā harbour is that the kind of superhero we need?

Eight years of Auckland Council planning says no. There is no provision for it in any of the council’s plans. The just released “billion dollar” (unfunded) city centre and waterfront “transformation” contains dozens of blue, green and yellow boxes – but none of these represent a downtown stadium.

All this doesn’t mean it can’t happen. There was no provision for a new stadium in the city’s plans in 2008 when a male sports minister from the capital persuaded an Auckland female prime minister that an Auckland harbour stadium was a go.

In 2018 we have similar actors but little signs of a repeat production because we don’t yet have a Rugby World Cup or Commonwealth Games catalyst.

Phil Goff says he welcomes debate on the latest harbour stadium proposal and wants to hear what Aucklanders support. But if that were true, he would be providing more of the detailed information he has on the relative merits of all the possible options: Mt Smart versus Eden Park, versus elsewhere.

Otherwise, Mt Smart’s orphan status seems destined to continue.

Mark Thomas leads a smart cities enterprise based in Singapore. He was an elected member of part of Auckland Council for six years.