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Give households relief from power bills

Hon Jim Anderton

Progressive Party leader

1 October 2008 Media Statement

Give households relief from power bills

Households should get a rebate on their winter power bills to deal with rising power bills, Progressive party leader Jim Anderton says.

Contact Energy has just announced price increases of 10-12 percent in Wellington and parts of the South Island. Meridian Energy and Mighty River Power have also recently increased prices.

Jim Anderton says a $200 winter power rebate for every household would cost less than a quarter of the gross annual profits of the publicly-owned power companies alone - $280 million

Jim Anderton supports government initiatives to review competition in the electricity markets.

But he says rising power profits should be offset by a straight discount on power bills.

“Cash back on your power bill is an idea that is tried and tested overseas. It is a highly progressive policy because it has the greatest effect for households that need help most, right when they need it most.

“If you could get $200 off your power bill in winter, when bills tend to soar…what a difference that would make.”

In the United Kingdom, the government provides a winter fuel payment of 250 pounds for over 60s and 400 pounds for over-80s.

Victoria provides low-income households with more than $1 billion a year in concessions for essential services such as energy and water. It pays a rebate to concession households of $19.50 for households who spend between $82 and $122 on LPG (approx cost of an LPG bottle); $97.50 for households who spend between $123 and $609; and$145 for households who spend more than $609.

More here.

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Progressive Party $200 Winter Power Rebate
What is a rebate?
The rebate is a refund from government from the proceeds of its ownership of power companies.

Low income households, and especially those on fixed incomes, would get a rebate of $200 on winter power bills.

$200 is an average monthly power bill for many of the homes in question, so the effect for many homes would be a month’s free power.

Who would be eligible?
At a minimum, we want all low and fixed income households to receive the rebate – superannuitants, beneficiaries, low income wage earners, for example.

Middle income households often find winter power bills tough too. Subject to further analysis of power company profits, we would like to see the rebate extended to other households.

Why a power rebate?
In July, Jim Anderton ran a series of ads around the country expressing concern about New Zealanders struggling to make ends meet in the current world economic climate.

One consistent response that came through was that many households, who are living from week-to-week, struggle to cope with winter power bills. Suddenly, household budgets come under pressure just to avoid a basic necessity like keeping warm.

At the same time, power companies are making sizeable profits. Most energy generating in New Zealand is owned by the public. As profits at those public companies rise, it’s logical for the owners – the people of New Zealand – to achieve a dividend for their ownership.

Paying out a return on public ownership as a direct rebate to those most in need of assistance is a highly progressive way of helping families. $200 means a lot more to someone whose income is low and fixed. It ensures the cash goes to a necessity.

How much would it cost?
According to Statistics New Zealand, there are about 1.4 million households.
Assuming half were eligible for a $200 winter power rebate, that would cost around $140 million. A $200 winter power rebate for every household would cost $280 million.

How would it work?
A winter power rebate would be administered by the energy retailers.

Households would register their eligibility by advising their electricity supplier.

A power company might enclose a letter to consumers with the monthly power bill advising that a rebate is available and inviting consumers to register.

Consumers would have to certify that they met the eligibility criteria. The power company would apply a credit to one power bill during the winter months and the government would refund the power company.

How much are publicly-owned power companies making?
A lot.

In the six months to the end of 2007, the three publicly-owned power companies reported earnings before interest, tax, depreciation and financial instruments of over six hundred million dollars.

• Meridian: Half year profit of 93.7 million, on EBITDAF of $253.7 million.

• Mighty River Power: Half year profit of $83 million profit on EBITDAF of $175 million.

• Genesis Energy: Half year profit of $61 million on EBITDAF of $175 million.

Total half-year publicly-owned power company earnings: $604 million.


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