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Power price rise shows it’s time to fix broken market

30 September 2013

Power price rise shows it’s time to fix broken market

The rocketing price of electricity and rising power company profits show that National’s broken electricity market needs fixing, Green Party energy spokesperson Gareth Hughes said today.

New figures of the Ministry of Business, Innovation and Employment show that residential electricity prices rose 3% in the past year, four times the rate of inflation, despite demand falling by 2.5%. In the past five years, demand has fallen by 1.6% yet electricity prices have risen by 27%, two and half times the rate of inflation. The four major electricity companies all reported rising profits for the past year.

The current ‘regulated market’ model was introduced by National in the 1990s and electricity prices have been rising at around twice the rate of inflation on average ever since. The Green Party, along with Labour, has proposed to introduce a ‘single buyer’ model called NZ power to fix the broken market and lower electricity prices by $300 per year for each household.

“It’s plain and simple: Kiwis are paying too much for power because of National’s broken electricity market. The current Government’s asset sales will only make the situation worse as private investors demand high returns,” said Mr Hughes.

“We’re using less power but prices and profits keep on rising. That’s a sure sign that the current market is broken.

“Electricity generation costs aren’t rising significantly – the vast bulk of our electricity is produced at very low cost by hydrodams that were built decades ago with public money. In fact, electricity generation from more expensive fossil fuel plants fell last year.

“National’s expensive asset sales are only going to increase the upward pressure on power prices.

“It’s time to dump National’s failed electricity reforms. We need to introduce NZ Power, which will work on behalf of electricity consumers to bring power prices down to a fair level. That will save families and businesses money, and improve health by allowing families to adequately heat their homes,” said Mr Hughes.

ENDS

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