Power players jockey ahead of mystery review

OPINION: Power companies are used to being criticised. When you supply an essential service, charge money for it, and keep putting the price up, it comes with the territory.

All the same, electricity retailers had been quietly congratulating themselves that their sector had a lower profile as a voting issue than at any recent general election.

That was, until the coalition agreement between Labour and New Zealand First included a commitment to "hold a full-scale inquiry into retail power pricing".

At this stage, no one seems too sure what the Government has in mind.

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Labour's stated priorities have been more in the areas of home insulation and a promised winter energy payment for low income households and the party seemed gun-shy on electricity ever since its NZ Power policy was held partly responsible for the 2014 election loss.

The new Energy Minister, Megan Woods, is understood not yet to have briefed officials on what the inquiry will entail.

It's also not clear whether Labour or NZ First drove the desire for such an inquiry.

However, the suspicion must be that it was NZ First, which has long regarded market mechanisms in electricity as a rort. If so, that implies an inquiry that will try to refight the battles of the last 25 years of electricity market reform.

That is the last thing anyone in the industry wants.

For a one thing, the power companies' business plans are all based on the complex but functional rules that have delivered New Zealand around 80 per cent, unsubsidised renewable electricity – one of the country's few big wins for climate change action – and the emergence of genuine competition among retailers.

For another, the battles of the past are irrelevant to the energy sector of the future.

In this world, the challenges are the marriage of digital technology, electric vehicles, new era batteries and micro-generation – rooftop solar power etc – with 'smart' homes and electricity grids, where today's consumers become tomorrow's electricity generators and both energy use and investment become far more efficient than in the past.

Achieving this requires a functioning platform for the competitors of the future.

Accordingly, the players in the electricity sector are already filling the vacuum around the Government's electricity pricing review with a lot of finger-pointing.

The electricity retailers, who compete with one another, claim the electricity network owners, who deliver the juice to consumers and operate as geographic monopolies, are trying to screw the scrum against them.

The network operators scoff that the traditional electricity retailers are scared of a little competition.

These issues are the focus of an Electricity Authority project into what it calls 'enabling mass participation' in the electricity market.

It published the findings of its consultation on that topic this week and concluded, among other things, that there is a major lack of trust between electricity retailers and electricity network owners over access to the network on which all this future development can occur.

Hence Mercury chief executive Fraser Whineray this week accused network owners – for which, read Auckland network Vector – of trying to deny consumers their 'energy freedom' by offering the same sorts of new services as the retailers have in mind and subsidising those initiatives from their profitable, regulated businesses.

For their part, the network owners say the retailers won't share electricity consumption data that would be essential to the level playing field they claim to seek.

And so and so on.

In coming weeks, expect to see all parts of the electricity sector react to the unexpected threat of a potentially backward-looking review by trying to turn it into a review focused on the future they all see coming while confusing the heck out of the rest of us.

- BusinessDesk

 - Stuff