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Fixed electricity charges need constraints: Labour

2000 web siteHigh fixed electricity charges should be tightly constrained by regulation because they serve the interests of the electricity industry and disempower consumers, according to Labour's energy spokesperson Pete Hodgson.

"People who pay high fixed charges effectively pre-pay part of their electricity consumption. The end result is that other energy options such as firewood, gas, energy efficiency or good old-fashioned frugality cannot compete. Moreover high fixed charges directly penalise small consumers relative to larger ones.

"The recent spiralling of higher fixed charges is a phenomenon that is purpose-built to force consumers to use electricity in place of other forms of energy. There are many instances where line companies have held, or even lowered, their fixed charges but where retailers have then raised the fixed component before passing it onto the consumer. However in some other cases the line companies are the culprits.

"Either way this is a practice which is unacceptable. High fixed charges may have validity for non-residential domestic consumers such as bach or crib owners but for the vast majority of domestic connections they are simply wrong."

Mr Hodgson said that he hoped that the legislation currently before Parliament to cap lines company prices would be extended so that the Commerce Commission could also take action against high fixed charges. He said that during his recent visit to Britain the Office of Electricity Regulation (OFFER) were taken aback at the size of some fixed charges in New Zealand.

"That is the difference between the British and New Zealand governments. Britain has no hesitation in seeking out anti-competitive practices and constraining them or outlawing them by regulation. However New Zealand's energy minister Max Bradford, and his Government, are so averse to regulation that they prefer to turn a blind eye to anti-competitive practices rather than address them."

© Scoop Media

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