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New smelter supports Big Electricity’s growth ambitions

New smelter supports Big Electricity’s growth ambitions

Press release December 8 2018, Molly Melhuish

The new smelter, opened yesterday (December 7), is a triumph for Big Electricity.

The electricity corporates who generate and distribute electricity are driven by their shareholders’ demand for profits and growth of their assets. Their industrial consumers are growing their demand, and residential consumers are paying for their increasing asset values.

The new smelter added the equivalent of 50,000 houses to New Zealand’s electricity demand from late September to early December. Their all-inclusive price is 5.5c/kWh – less than a fifth of the typical residential price of 29c/kWh. The smelter price includes all network costs. Their increasing demand helped drive up spot (wholesale) prices, averaged over all October, to 30c/kWh.

What does the Electricity Price Review committee think of this cheap industrial electricity, paid for by residential consumers? Note that Genesis plans to raise residential prices, by 3 cents to 4.5 cents per kilowatt-hour, from January.

The Big Electricity corporates are lobbying to increase the fixed charge component of our power bills. Today low users of electricity must be offered a price that charges no more than 30 cents per day. The rest of the bill is charged by the kilowatt-hour, and this can be controlled by using less electricity, whether by energy efficiency or adding solar panels.

Big Electricity wants to charge over $2 per day to all users, including low users such as superannuitants or other householders with very low incomes. This unavoidable charge guarantees industry revenues, but would make householders’ investment in solar panels or energy efficiency less economic. Power bills of very low users could double or worse.

Big Electricity is as almost bad for peoples’ well-being as Big Tobacco and Big Sugar. By hiking the cost of electricity, an essential service, it is forcing more and more consumers into the sad choice, whether to heat or eat.

Big Electricity’s plans for the future are described in Transpower’s vision, “Te Mauri Hiko”, which would double New Zealand’s power generation by 2050. The big winners would be big industry who would replace their gas- and coal-fired boilers with electric ones – a shameful waste because it uses our highest quality energy for low-grade heat. Other winners will be those who can afford electric cars.

It’s time for the losers to crash the Big Electricity monopoly on electricity regulation and planning. Self-regulation must be replaced by real regulation within laws that specify “fair” and “sustainable” as objectives.

Consumers must be fully represented at all levels. Planning must promote local energy supply whenever it is more cost-effective than centralised electricity supply.

The Electricity Price Review must recognise the new smelter as the worst example of residential prices rising while industrial prices fall. This is neither fair nor sustainable.

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