Fitzsimons Jeanette: Urgent Debates — Mercury Energy—Disconnection of Electricity Supply 
Fitzsimons Jeanette: Urgent Debates — Mercury Energy—Disconnection of Electricity Supply 
[Volume:639;Page:9743] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 Can I add my condolences to the Muliaga family to those of my colleague. 
Household electricity prices have risen 18 percent in real terms over just 8 years and we are faced with a paradox of pricing. At one end power is now too expensive for people on low incomes to afford their basic needs; and at the other end power is still too cheap to prevent a lot of people from wasting it. It is time to address the pricing structure because there is a pricing structure that can address both of these issues; it is used in a number of places overseas and—in fact—is known in those places as a lifeline tariff. This is called progressive pricing and it goes like this. 
Every household and only households would be able to buy a basic block of power at a low price. That is not a subsidy. New Zealand generates lots of power from our old hydro stations that is really cheap and that price just reflects that. Then above that block of power households would pay an increasing amount for further blocks of power so that at the margin the price would always be higher than it is on average. This has been Green Party policy since the 1970s when I presented a computer run of exactly how it would work for the Auckland Electric Power Board—the ancestor of today’s Mercury Energy. The board thanked us politely sent us away and did not consider it further. 
It is high time to consider that policy again and I was most interested to find that last year the Government did exactly that. The Ministry of Economic Development produced a report last year on various pricing structures. It was starting to get embarrassed by the fact that electricity company margins had doubled in just 3 years and that the windfall profits that the State-owned generators were making were starting to become quite embarrassing for the Government. The ministry considered a number of options along with progressive pricing and unfortunately decided to do virtually nothing. 
The report is interesting. It acknowledges that this would be a way of making a basic amount of power affordable to people on low incomes. It acknowledges that it would do that without causing a huge explosion in power consumption and that in fact the high marginal price of power would be likely to cause people to use it more efficiently—meeting both the goals of the Government’s social policy which is that everybody is warm and fed and the goal of the National Energy and Conservation Strategy which is that we use electricity a great deal more efficiently than we do now. 
Why did the ministry decide against that? It decided against that because it is not compatible with competitive market arrangements. So we have something that works very well to address the needs of real people it works very well to address the needs of the environment energy efficiency and climate change but it does not work very well to implement the ideology that the market must be totally free and competitive and so it was abandoned. 
 Never mind that one could perfectly well legislate for that one basic block of power and the price that had to be charged for it for everyone and that then one could allow the competitive market to determine the prices of the further blocks above that—and the power companies would no doubt look after their interests. So there are ways of dealing with market competition as well as with the needs of the poor and the needs of climate change. 
The report from the Ministry of Economic Development is very disappointing. It is quite shallow. It puts up a heap of straw men about how we would have to have different-sized blocks for different-sized households. We already have research that shows that power consumption is not closely linked to the number of people in the house. It is much more linked to the fact that there is a house and there is one fridge whether there are three people or one person in the house. That is so even in the case of hot water which is most closely linked to the number of people. If one has for example six children in the family one is probably putting them through the same bathwater anyway. So there is not a close correlation between numbers and power use. 
The biggest correlation that exists is between power consumption and income. High-income families have high power bills and low-income families tend to have lower power bills because they cannot afford it. We could combine the idea of a rising block tariff for power with two existing ones. One is the attempt to insulate all the old homes so that people on low incomes have their power bills managed because they are not expensive to heat. The other is the new technology of smart meters which are starting to be rolled out which give the customer feedback about what they are using and the cost of what they are using. 
The combination of a lifeline tariff and a smart meter would enable households to see how they are going and decide for themselves whether they can afford to go into the second band of power at the higher price that month or whether they want to try to stay within the lifeline tariff. They would be in control of their situation they would have the information they need and we would not have people unable to meet their power bills and being disconnected because of it. I believe that the Government should look at this idea again and if necessary a select committee should look at it because it is a good idea. It has been around for 30 years. Other places do it; why should New Zealand not do it?