Madness of the market rules electricity

One night last year I arrived home to find the power off. The fuse box was fine but it didn’t take long to find the problem. The outside meter box contained a note to say the power had been disconnected. Knowing our power bills were up to date I sat with a candle to read the phone book and called the company. Yes the power was disconnected because the dwelling was unoccupied I was told. Well no I said, we lived here and had for several years so there was some kind of mistake. The company insisted I was wrong, refused to reconnect the power and referred me to another company who they said had taken over the contract to supply us. The conversation deteriorated from there and to cut a long story short it took several more phone calls to get the power back on. It turned out the meter had been disconnected in error because another resident elsewhere had changed from one electricity supplier to another.

If this sounds confusing then join the club!

My boys enjoyed the experience however. By the time I’d got off the phone there were a couple of dozen t-light candles spread around the house and it resembled the set from an old Dracula movie.

This experience is a small reflection of the unbelievable brainlessness of the so-called electricity reforms introduced by National in the 1990s and continued by Labour since.

These so-called “reforms” took a well functioning, community owned electricity supply network, chopped it up into a multitude of self-interested companies – some community owned, some government owned, some privatized – and created several artificial “markets” to generate, transmit and sell electricity. Well-groomed men in suits had a field day designing corporate brands and flash logos, developing mission statements, producing glossy brochures, organizing advertising campaigns and calculating projected profits.

Names like Meridian Energy, Mighty River Power, Unison, Vector, Mercury Energy, Transpower, Genesis, Powerco etc emerged from this lunacy. Don’t worry if you don’t know if they are generators, transmission companies, lines companies, retail companies, government owned, local community owned or privately owned. The Minister of Energy probably only has a vague idea himself. 

The problems created by this madness emerged quickly and have become more acute as time has passed. We have seen prices skyrocket, major power failures, supply uncertainty, poor maintenance, lack of investment and the absence of conservation values.

The latest saga was revealed last week when the Commerce Commission intervened to accuse Vector of abusing its monopoly as a lines company. The Commission claims that Vector is ripping off its customers and charging higher rates in Wellington to subsidise residential consumers in Auckland.

Vector is defending its practices but the overall experiment, having failed so dismally to deliver secure supplies of electricity at reasonable prices, must surely be deemed an abject failure by even the most hard-nosed free marketeers.

The situation is now so bad that last week we had the National Party’s energy spokesperson, Nick Smith, suggested that the electricity generator Transpower should be changed from an SOE (state owned enterprise) to a public service provider so it could invest properly in a stable, secure energy supply rather than having to return profits to the government. What a novel idea – why hasn’t anyone thought of it before?

While Smith’s suggestion was an unfamiliar breath of fresh air, Labour’s David Parker could only say this might be considered as part of yet another review which is looming.

Labour’s answer to the problems has been to set up an Electricity Commission to have oversight of the “market” and make recommendations on regulations that might be needed to tidy things up.

This is hopelessly off the mark. We don’t need a commissioner to prop up a phony market where extracting profit for shareholders takes precedence over a secure electricity supply. We need to nationalize our electricity network and ignore the irrational cries of the men in suits and their profit-hungry shareholders.

New Zealand is a country of just four million people – not much bigger than Sydney. Common sense says that the best delivery of essential infrastructure such as electricity is though a community-organized and controlled supply.

Our parents and grandparents built the hydro dams, erected the pylons, constructed the substations, installed the transformers and ensured a reliable power source to every home.

We have unlearnt all this and the truly pathetic level of political debate means that nothing will change soon. The best advice in the meantime is to keep the candles handy.