Alliance Party says time to end the free market experiment in electricity

Alliance Party Media Release FOR IMMEDIATE RELEASE 24 September 2009

The free market experiment in the electricity sector has failed, says Alliance Party energy spokesperson Ian Tinkler in his submission to the Ministerial Review of Electricity Market Performance.

“This structure does not provide security of supply, and it increases the price paid by both households and businesses much faster than the general rate of inflation. What is more, it increases the price of power for households faster than it does for businesses,” says Mr Tinkler.

Electricity prices were stable immediately after the current structure was created following the Electricity Industry Reform Act 1998. However, since the number of retailers has consolidated, electricity prices have increased significantly.

The Alliance believes that to ensure ongoing secure supply, the Government should combine SOE generation assets into one ‘National Generator’, give this generator the responsibility to ensure there is enough electricity to meet future demands and provide it with the ability to source electricity from a wide range of sources including hydro, solar and wind to help meet this obligation.

“The Alliance also recommends that all retail customers of the three SOEs are transferred to community owned entities. It is important that all consumers have an opportunity to have influence over their own retailer as was the case in the day when local power boards and metropolitan electricity departments existed. Major electricity generators like Contact Energy and the current SOEs should not also be permitted to retail electricity unless there is a current contract with a major user,” says Mr. Tinkler.

“There needs to be tighter controls on how Transpower finances it operations as well. It is unclear what industry the board and management of the SOE believe they are in as in their 2007 annual report the company stated that they had 10 subsidiaries whose prime activity was capital raising. Besides, the Alliance Party is not comfortable that important infrastructure is owned overseas and then leased back,” he says.

The Alliance strongly recommends that TransPower is removed of its SOE directive to return a dividend and that the Government itself contributes towards greater investment in lines infrastructure, says Mr Tinkler.

The Alliance Party believes that if these moves are implemented by Government, they will ensure both security of supply and lower prices for all customers.

ENDS

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