The Electricity Price Review should bring prices down for consumers. But when?

The Electricity Price Review has good ideas, and they need to happen ASAP

Steve O’Connor, CEO of Flick Electric Co., is excited about the Electricity Price Review outcomes for Kiwi households – but he wants to see action now.

Electricity reforms: they aren’t sexy. But they are important. They are the sensible shoes that will take us into a cool, green, technology-filled future so it’s important to get them right. Making sure our electricity market is humming is key to our environmental, physical, social and economic wellbeing. We can’t have cool stuff like a low-carbon future full of driverless electric cars streaming down streets lined with warm, dry houses that healthy whānau call home if we don’t sort out the electricity market first.

Maybe you think things are OK at the moment. You flick a switch and the lights come on: bingo, a functioning electricity market in Aotearoa! Nope. MBIE research shows Kiwi households are now paying a staggering 79% more for power than they did in 1990, while industrial users are paying 18% more, and commercial businesses are paying 24% less. 

OK, so we pay too much, but that’s just life right? No. We can and must do better. 

Our system is hurting our tamariki and rangatahi every day. Each winter our hospitals are confronted with more than 25,000 Kiwi children suffering from respiratory infections and illnesses caused by living in cold, damp houses. While the problem is caused by a number of issues, including severely poor housing stock, there’s no denying that high energy prices are making parents choose between the essentials in life. That’s just not OK. 

Let’s be clear, individual political party support is not the issue here at Flick. We are concerned about the policies and political changes that impact our electricity industry, and, in turn, the lives of Kiwi electricity users. We know that the current electricity market is broken, and places the burden of structural and market inefficiencies and unfair retail company behaviours on the shoulders of consumers. 

So, over the last 18 months, it has been with equal parts scepticism and hope that we’ve followed the government’s response to these mounting problems through the independent Electricity Pricing Review. The initial investigation was tasked with identifying whether the electricity market as a whole is delivering reliable power at a fair and equitable price to consumers, as well as supporting innovation in technology and the shift to renewable energy.

Last week the government released the Electricity Price Review’s final report and its recommendations. Let me take a second to explain what that means for us non-bureaucratic humans. The report acknowledges there are fundamental issues for consumers, and businesses alike and has asked for changes to be made. Lot’s of those changes are good old plain common sense.  

Kiwi electricity consumers have historically been viewed and used in a similar way to electricity itself: as a commodity, a pawn with which to drive business growth and profits. The market structure has supported this model, offering consumers little in the way of choice, transparency, education, support, or encouragement to engage with the industry and overall electricity use. The focus on the almighty dollar upstream has had a flow-on effect downstream, and this is largely why we now find ourselves in the position we’re in. 

We’re thrilled to see a moratorium on misleading prompt-payment discounts (which are designed to confuse, penalise and bamboozle consumers while lining the pockets of business) on the horizon. And they are also going to scrap win-backs and saves which is essentially a company promising to change their unfair ways after you’ve broken up with them. You know the “if you stay with us we’ll drop our prices and do all this stuff we didn’t offer you when you were a loyal customer” phone calls. They’ll be gone by Christmas according to the announcement.

The government has also asked officials to set up a consumer advisory council and ensure regulators listen to consumers. We think this is a great idea. Power to the people!

Minister of Energy and Resources Megan Woods (Photo by Dianne Manson/Getty Images).

Any downsides? Things that suck today will continue to suck until the organisations charged with change get up and do their jobs.  

The preventable diseases that hurt our kids’ lungs will continue, and hundreds of whānau will have loved ones in the hospital and doctors offices sick and in pain. The market conditions that are holding back green innovation will continue to stop businesses from coming up with ideas to move us towards an economy that doesn’t poison our atmosphere. Our inaction will hurt our health, wealth and wellbeing. We know how to fix this stuff, and we are choosing not to. 

With the health of our country at stake, we can’t afford more faffing about. The big changes aren’t just about giving consumers a voice but in getting the nitty-gritty of the electricity business right. That’s where the magic happens. And by magic, we mean innovation and transformation.

We know we need a greener future, we know we need innovation and creativity in our industry but the stodgy electricity market is suffocating that spark and leaving us with a system that favours inertia and inaction over people and change.

Can we fix it? We hope so. There are a range of organisations involved in this change, the Electricity Authority, MBIE, Provincial Growth Fund, Green Investment Fund, Callaghan Innovation, Endeavour Fund and Innovation Partnership programmes and a whole bunch of independent retailers, generator/retailers and consumers that need to work together to make this a success. If that sounds like a crowd – you’re right. This is going to be like herding cats.  

We’re worried the current set-up isn’t going to change fast enough. The “implementation matrix” is pretty depressing and the call to “encourage more sector innovation” falls to MBIE to implement in the “long term”. That’s just not good enough, we need innovation today – yesterday if possible. How else will we be able to enjoy a low-carbon future and avoid catastrophic climate change impacts?

And there are issues with the Electricity Authority (EA) too. They’ve been asked to help with “market-making”,  essentially creating a level playing field for big and small players alike. If that sounds hard to do, you’re right. But luckily the EA has already drafted code to sort things out. Now they just need to roll it out. We’re ready, they’re ready, we’re all ready… so what’s the hold up?

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We don’t know. We’ve even had a chat with our competitors and they’re stumped too. Yip, things are so bad we’re chatting to the people we are in direct competition with (shout out to Ecotricity, energyclubnz, Pulse Energy, Vocus (who also retail power through Slingshot and Orcon), and Electric Kiwi) and we all want the change to happen now. 

So what now? To our esteemed colleagues at EA, time to lead the way and implement the changes: the government has laid the challenge, now it’s up to you to deliver. We can’t afford a failure.  

We’re all watching and hoping for change before Christmas 2019.

This content was created in paid partnership with Flick Electric Co. Learn more about our partnerships here


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