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Electricity reforms nutty: Labour

Labour
2000 web siteRegulation to restrain actual and potential anti-competitive practices amongst electricity retailers will be essential to salvage anything out of the Government's electricity restructuring, according to Labour's energy spokesperson Pete Hodgson.

Mr Hodgson has just returned from a week in the UK where he met with officials, regulators and consultants in the electricity industry, as well as with the industry itself.

"With true British restraint and courtesy, they think New Zealand is nuts. They cannot understand our Government's aversion to regulating against anti-competitive practices. They have adopted a very pragmatic approach to regulation and have reduced power prices considerably as a result.

"The British approach is not only to invoke regulations against lines companies, but to stamp out anti-competitive practices against energy companies as well. In New Zealand those practices include disconnection fees, some forms of loyalty schemes, rising fixed charges and the like.

"The British experience has been different. They have not experienced those practices to any great extent but they had to deal with many anti-competitive practices, especially in the door to door selling of electricity contracts, and have done so without hesitation. Their regulatory regime is powerful and effective. They do not shrink from the necessity to regulate, which is why their prices have come down and ours have gone up."

Mr Hodgson said that it was "something of a revelation" to visit Britain and watch jaws drop in amazement each time he explained the recent history of the New Zealand industry to the British experts.

"Britain is very much in favour of a competitive market, and arguably has advanced its reforms further than any other nation. But they did not take the step of an ownership split of line and energy companies and they openly embrace regulation of all parts of the industry as a prerequisite to a competitive outcome.

"In short Britain has ensured that common sense triumphs ideology. In New Zealand the opposite has happened."

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