Analysis: “There’s broken windows, they’ve got mattresses and blankets covering them, mould everywhere, no heating, the houses are always freezing. the kids are always getting sick,” says a renter, in Otago. “But no-one complains to the landlords, because they need good references so they can get a better flat, next year. So, they just have to put up with it.”
That is just one of the voices heard by the independent Energy Hardship Expert Panel, appointed by outgoing Energy Minister Megan Woods to conduct a comprehensive two-year study into the problem – and to seek solutions.
The panel delivered its report to the minister in July, but it was never published; it’s only now been disclosed under the Official Information Act. The report highlights two fundamental problems: with NZ’s substandard housing, especially rentals, and with the prices paid for energy.
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Three hundred thousand people live in homes they can’t afford to keep adequately warm, it finds. Māori and Pacific peoples are two or three times more likely to suffer energy hardship; renters are five times more likely to be unable to keep their homes adequately warm.
Crowded, cold, damp and mouldy housing causes increased hospitalisations for asthma, colds and flu, and more sick days and care days. At its mortal extreme, it’s calculated to be killing about 229 people a year, at a cost of about $2.9b to families and the economy.
The panel heard that the cost of electricity is the foremost factor contributing to energy hardship in NZ. It was told of families using outside fires to cook their meals to keep costs down; and of families living in homes with no electricity until they had saved sufficient funds to get it reconnected.
“Sadly, these stories are not isolated incidents,” the panel says. “People spoke of desperation, frustration and stress.”
Soon after receiving the report, Woods spoke to energy sector leaders at their annual awards. She highlighted work like the Winter Energy Payment for beneficiaries and pensioners, and the extension to June 2027 of Warmer Kiwi Homes, delivering 26,500 insulation and heating retrofits a year.
But she also implicitly acknowledged that the real improvements would be achieved, not with bottom-of-the-cliff subsidies and top-up payments for families, but by supporting the construction of renewables, and market measures to make sure electricity is reliable and affordable.
A National-led incoming government promises to fast-track consents for the construction of new renewables, and investment in offshore wind.
Yet, as my colleague David Williams reports today, that comes with its own complexities.
Commissioners yesterday refused consent for an 88MW solar farm in the Mackenzie Basin, saying the country’s need for more renewable power was outweighed by the need to protect ecologically significant land, flora and fauna.
And even as new renewable power comes online, it will be sucked up by demand from industries shutting down their coal and gas-fired boilers, and by the rapid uptake of EVs. If anything, the wholesale market price for electricity will continue to rise.
I talked this morning with Keri Brown, the chair of the independent panel, who told of travelling the length of the country and hearing the heartbreaking stories of families living in cold, black mould-ridden homes. Some couldn’t get their sick kids well enough to return to school – the one place where they might be warm and healthy.
She will be seeking a meeting with the new minister, likely to be Chris Bishop.
Solutions to energy hardship won’t just be found in building new solar and wind farms. The panel’s report criticises the lack of competition in the electricity retail market, in which four generator-retailers have 84.3% market share, and 35 independent retailers the remaining 15.7%.
It recommends the Electricity Authority and Commerce Commission investigate network pricing methodologies, and that retailers be required to notify customers of the most affordable plan each year.
If there was one change that Brown would make to the electricity retail market, she says, it would be to make the Electricity Authority’s Consumer Care Guidelines mandatory. She believes power retailers are shifting customers to pre-paid deals, so they don’t have to report on disconnecting them – instead, families are effectively disconnecting themselves when they can’t pay.
Should the electricity sector be the subject of the next Commerce Commission competition study? Absolutely, she says. It needs to be made easier for smaller community and iwi providers to enter the market. “It’s very hard for small players to get in,” she says, “because there’s not visibility around the gen-tailers. They do not make visible what they’re charging themselves.”
Missing in this is a deeper questioning of the reliance on “Market Forces” to provide for our energy needs. The current market structure is a complex means for addressing a relatively simple need. Up until the 1990s our energy generation was undertaken by a Public Corporation with the primary purpose of ensuring NZ had sufficient electricity. Now it is provided by a number of competing entities with the only purpose of maximising profits. Things stared to go wrong as soon as the ill-conceived corporatisation was complete. The system was not broken up in a logical way, and the the sytem has inherent “pinch points” the provide the capacity to wring windfall profits to whichever entity owns it. Our generation network needs to be operated as a single system. Instead we have a shambles of an orchestra that is managed by a conductor – The Electricity Authority – that is tasked with making the commercial model operate against its natural profit maximising purpose.
The model is a DUD – it is broken – it is even less fit for purpose when the as yet uncertain future of energy supplies and demand is put into the picture. At its most basic the problem with the market model for energy generation is that the economy/society requires a generation surplus al of the time where as the private ownership model makes money out of scarcity.
We also have no strategic capacity to invest in renewables – Government act like the mad king issuing orders to an imaginary army – hoping that the battle for the future’s energy supplies will be won. And so we get the various parties getting consents for windfarms so that no other party can get them – the entire process is chaotic – there is no coherent strategy for investing in roof top solar – and there is no national strategy for best utilising our existing and possible future hydro-generation resource to counterbalance variable renewables such as wind and solar.
NZ urgently needs to renationalise the electricity generators – put it all back as it used to be and then develop a coherent nation investment strategy for building sufficient energy supply to power our future.
All of these tales of woe outlined above are not simply issues arising from the cost of energy, they are a testament to the failure of the free-market reforms unleashed on the nation by Lange and Douglas – these did nothing for economic efficiency or strategic planning – as you may have noticed – these reforms did not make anything cheaper, better, or more plentiful.