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Electricity Industry Bully Boy Stance

Electricity Industry Bully Boy Stance on Governance Voting

"It has not taken the electricity industry long to re-establish a 'bully-boy' stance on electricity governance issues" said Sustainable Energy Forum spokesperson Mrs Molly Melhuish after being told today that the Forum would not be allowed to contribute and vote whether to accept or reject the new electricity industry rules.

"The ink is hardly dry on the Commerce Commission's determination on the new governance arrangements for the electricity industry. This allows the industry to set rules which fly in the face of Government policy, and now the new electricity governance body has moved to stop groups representing energy efficiency and small-scale renewable energy interests from participating in voting on the new rules."

"The ability of energy efficiency and small-scale renewable energy to contribute to a reliable energy supply is in grave danger", said Mrs Melhuish.

"The present system of electricity governance gives the large generating-retailing companies an almost free hand to set market rules to their advantage. Energy efficiency services cannot get a foothold in this market, and renewable energy projects such as wind farms are so penalised by the market rules that only the major generating companies will be able to afford to build them."

The electricity industry's new electricity governance system has only just been approved by the Commerce Commission. In doing so the Commerce Commission expressed concern that input by consumers and demand side participants to date "had been almost totally disregarded by supply-side interests."

Consumers at least have a place at the table in electricity governance. In contrast, suppliers of renewable energy and energy efficiency, both of which should be competing with the major generators, are completely shut out. The electricity market is not designed in the public interest. In law it is a private arrangement between wholesale market participants, and it is being treated as such. No small-scale energy supply or service businesses have rights under this contract.

Overseas commentators who presented evidence to the Commerce Commission's hearings can hardly believe the way New Zealand's dominant industry players are allowed to control the rulemaking. Professor Hogan, consultant to Transpower, and designer of the U.S. standard electricity market design, recommended a "radical reorientation of oversight and decision processes". However this advice was ignored.

The Commerce Commission's approval of this flawed governance is not however the last word on the subject. The new rulebook must be approved by the registered voters, including consumers. To date the consumers have unanimously spoken out against the proposed rules. Transpower also has serious concerns and Comalco has just filed an appeal against the decision in the High Court.

"The Governance Establishment Committee's final insult was to require Sustainable Energy Forum to apply for voting rights as consumers. Our interests are not in the consuming of electricity, but in competing with generators, by supplying distributed renewable energy, and "negawatts" (energy savings) through energy efficiency services.

If the major industry players can't put up with competition from more cost-effective small-scale providers, they surely forfeit their mandate to "self-regulate" concluded Mrs Melhuish.

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