Low Fixed Charge Electricity Tariff A Badly Targeted SOP

Government’s “targeted relief on electricity bills” is a knee jerk reaction to the new round of electricity price rises, says GreyPower President Graham Stairmand. The basic problem is that the electricity industry is out of control, and able to make these unwarranted price rises. That is what needs to be addressed. The low fixed charge tariff is an ambulance at the bottom of the cliff, picking up the wrong people.

The policy has been around since Labour took power, but its motivation seems to have changed. Initially, it was a sop to the Greens intended to promote increased electricity usage efficiency. Now, because of the price rises, it has suddenly changed into help for low income families.

But it won’t help the solo mother of six living in a substandard, uninsulated all electric rented house. On the other hand, the rich executive living in a fully insulated, double glazed apartment with gas appliances will qualify.

As well, it ignores regional differences. The average household energy consumption in Southland, for example, is over 10,000kWh/year; in North Auckland it’s less than 7000. Basing the tariff on the national average consumption of 8000kWh clearly discriminates against people in the colder parts of the country.

The government policy statement on electricity says that the number of different tariffs should be reduced, and they should be simplified, so that they’ll be easier to understand. The government’s action has now compulsorily added another tariff that is difficult to understand. Over the last four years, the voluntary uptake of this tariff has been low, because people are not sure if they qualify. Many who should be on it, aren’t; and some who shouldn’t be, are.

The retailers without any justification increase prices as a matter of whim and we question whether a 20% increase in the total charge is passed back to the other participants in the chain from generator to retailer. If not then the retailer is increasing his price by more than 20%.

The whole industry needs to be regulated so that the price of electricity is controlled and not subject to either the whim of the supplier or that of the government that reaps the benefit of any price rise in increased dividends and GST.

Fortunately consumers are voters also.

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