New Zealand’s electricity market system is stacked up against the consumer when it comes to lower power prices.
The power sector has had a rocky road this year with rolling blackouts, soaring prices and mounting calls to reform the entire market.
But the spotlight has been on the players in the industry for a while now.
There was the Electricity Price Review in 2019 that found more than 100,000 households spend more than 10 percent of their income on power. This August, about 34,000 customers lost power after not enough electricity was generated. And this month, the Electricity Authority, which regulates the industry, is releasing its review into the wholesale market.
Today The Detail looks at our electricity market; why some say the current structure needs to go; and why there are big profits to be made in power.
Stuff senior journalist Tom Pullar-Strecker says part of the issue is our mix of power sources.
“New Zealand is relatively unusual in that the majority of our power comes from hydroelectric power schemes and it underlies some of the controversies around market structure,” he says.
“Electricity can and should be cheaper than it is.”
Wholesale power prices are dictated by the most expensive electricity on the market – so if coal-generated power is required, all producers, including of cheaper hydro power, get paid the same amount.
Pullar-Strecker also explains why small retailers are becoming increasingly frustrated by the market that is dominated by five big gentailers – that is, companies that both generate and sell power.
And he talks about the country’s 100 percent renewable energy target by 2030 which could flip the entire market on its head.
The Detail’s Jessie Chiang also speaks to Bryan Leyland, an industry expert with 60 years experience, who suggests changes should be made in the way of a single buyer market or a capacity market.
“It’s not right,” he says. “Poor people paying [heaps] for power and it just shouldn’t be.”
But Leyland says going back to state ownership wouldn’t be better.
“Private ownership I think, is essential because when you’ve got genuinely competing companies you get the best results,” he says.
“The problem is to have a market where they are able to, and must genuinely, compete.”