Media release, Domestic Energy Users’ Network 6 March 2012-03-06

Selling the right to unregulated price-gouging

The mixed ownership model will privatise far more than State-owned power stations. It will sell the right to unregulated price-gouging.

State-owned power companies charged 2 to 4c/kWh less than the two privately owned companies, over many years. This “self-restraint” reflects the SOE obligations for corporate social responsibility, which go beyond those of other companies.

Last year, the purpose of electricity regulation was changed, from providing an essential service at minimum cost, to developing electricity to promote economic growth. This does not release Government from its international obligations relating to human rights to essential services, or biodiversity, or climate change.

Regulation now maximises “investor certainty” instead of protecting consumers. It actually promotes price discrimination where industrial consumers pay only half as much, on average, as domestic consumers.

Rising domestic prices guarantee profitability of new power stations, inflating asset values and making privatisation highly attractive.

The regulator, the Electricity Authority, is accountable only to the big businesses that trade on the electricity market. Even part-privatisation will lock in these high asset values, and the right to maximise profits at the expense of domestic consumers.

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