Mackey Moana: Estimates Debate — In CommitteeText is incorporated into the Bound VolumeMackey Moana: Estimates Debate — In Committee[Sitting date: 31 July 2013. Volume:692;Page:12167. Text is incorporated into the Bound Volume.]MOANA MACKEY (Labour):New Zealanders are paying too much for their power bills. The next Labour-led Government will do something about this very serious issue which the current National Government is refusing to acknowledge even exists. What we have seen since the global financial crisis hit is that in every other developed country power prices have dropped as demand has flattened and as protections for consumers have kicked in. New Zealand is one of the few countries in the developedworld where power prices have continued to increase at twice the rate of inflation despite flattening demand a surplus of generation and a collapsed carbon price.In 1 year we have seen an increase of 10000 in disconnections—in 1 year. That is 10000 households that no longer have power because they cannot afford to pay the power bills. We have flattening demand in this country. We have an oversupply of generation. If power prices are not going down now then they are never going to go down. It shows what the Labour Party has been saying which is that the Bradford reforms have failed. We do not have the kind of competition in our retail market that would ensure that retail margins and prices are driven down in times of low demand. A Labour-led Government will do something about it.We have a Minister of Energy and Resources who says that New Zealanders are not paying too much for their power prices. But he does not know what too much would be. So I think that is a zero credibility fail for the Minister of Energy and Resources. You cannot say that New Zealanders are not paying too much if you do not know what too much is and the Minister of Energy and Resources does not know. I suspect that too much would be when the Minister of Energy and Resources cannot afford to pay his power bills on his ministerial salary. Then power prices will be too high. But until then the rest of New Zealand can suffer with power prices continuing to increase at twice the rate of inflation and the Government refusing to do anything about it.We have the second-biggest gap in the OECD between residential and industrial tariffs. So when the Minister stands up and says that the market is working really well what he is saying is that it is working well for the big end of town. That is being offset by residential consumers who are paying far more for their electricity than they should be given the fact that New Zealand is blessed with an abundance of cheap renewable energy. More than 60 percent of our electricity comes from hydro generation—from assets that were built by the taxpayers of New Zealand which have been paid for time and time again—from a free public resource: water. We should have some of the cheapest energy in the world and yet we do not because of the way we price electricity in this country.I would like to see the next National Government speaker Mr Jonathan Young actually explain why hydro producers should be being paid the marginal price set by gas when they have not done anything—when they have not done anything—to deserve that windfall and profit from assets that were built by generations of New Zealanders and taxpayers. A Labour Government will change the way we price electricity because we do not have competition in our retail market.I recently went to the launch of a new retailer in Dunedin called Payless Energy. The National Government rhetoric was: “Here’s another retailer. That means we must have competition.” Well the reality is that there are 10 retailers now in Dunedin and yet the market is still overwhelmingly dominated by the four big generator-retailers. They are happy to let those small companies pop up and have a handful of installation control points but the minute they come to scale that is when they will no longer be tolerated. Just because you have a number of different companies does not mean you have competition in pricing Mr Young. It does not mean you have competition in pricing.So the first thing the National Government did was try to blame transmission charges and lines companies for the increases in power prices since the Bradford reforms. Let us be clear about the cost of the Transpower upgrade. Yes it had to go ahead. Yes it is billions of dollars. Yes both Labour and National have agreed that the upgrade should go ahead. Here is the difference. A Labour Government said to Transpower: “You do not have to pay us a dividend so you can pay for that transmission upgrade out of what you would have been paying to Government and then there will be no pass-on cost to the consumer through the retailers because that’s howyou can pay for it.” When National came in not only did it say to Transpower: “We want that dividend back right now by the way.” but it said: “Can you backdate it.” And now we have a Government that claims to care about the rising cost of electricity on businesses and households saying to Transpower: “Actually you need to charge consumers for what Government was paying for when Labour started that transmission upgrade work.”So Mr Young why is your Government requiring Transpower to now supply a dividend and to backdate the payment of that dividend when all it is going to do is impact on those transmission charges which will now be passed on to consumers through the retailers? I have been going around visiting lines companies and they have been very frustrated. In fact in the case of one lines company which is publicly owned as most lines companies are it wanted to pay a dividend back to its consumers. It wanted to pay a dividend back to its consumers so it had to pass that through the retailers because that is the way that it charges. None of that dividend was passed through to the end consumers. So here we have a lines company which National likes to blame for putting up increases on households—[Interruption ] Jonathan Young says: “True lines companies are doing that.” Here we have a lines company that was actually trying to give some money back and the retailer refused to pass it on. It pocketed it Mr Young. How is that a system that is good for consumers?Let us have a look at what has happened up in Auckland because what I think Mr Young does not understand is that actually lines companies are incredibly tightly regulated—thanks to the last Labour Government which regulated lines companies. They are very tightly regulated as to what they can charge their consumers. They have a pricing path that is set by the Commerce Commission. They have to provide a certain return. They are not able to go out there and just charge whatever they want like the retailers can with a retail margin. They have to provide a return that is based on their actual costs and then a fair return as well. So that is what they charge. The Commerce Commission did a reset last year which came into force in April this year where it actually said that Vector which is our biggest lines company based in Auckland needed to drop its prices. So Vector did that and only two of the 11 retailers in Auckland have passed that cost saving on to consumers—only two.The lines companies which actually have no control over what they charge because they are so tightly regulated which charge based on their actual costs and which have tried to give money back to consumers but have not had that money passed through in some cases by the retailers are apparently causing all the problems according to the National Government. Well that is not true. None of the research backs it up. The increase in prices since the Bradford reforms has been in the wholesale electricity market the retail margin. It has not been in transmission charges it has not been in the lines charges. It is utterly dishonest for National to claim that that is the case when it is not.What the National Government likes to point to is the What’s My Number campaign and to the fact that that has been so successful which it says shows that we have competition. Well actually there is no research that has been done as to why people change power companies. The UK had a similar campaign. It has actually researched why people change power companies. One-third of the people who changed changed to a tariff that was cheaper; one-third of the people who changed changed to a tariff that was exactly the same; and one third of the people who changed changed to a tariff that was more expensive. What that shows is that there is a range of reasons why people change electricity retailer and price is only one of them. One of the questions we have been asking the Government is how many of those people who have gone on the What’s My Number website were people who have shifted house people who had just moved.They were not looking for competition; they had just simply shifted and wanted to find out who was out there. Well the Government is not collecting those kinds of statistics either.The reality is that when you look at that gap in price that is offered on the What’s My Number campaign often the difference is an early payment discount. That is the difference in the power prices that are being offered. Well if you cannot afford to pay the power bill in the first place then an early payment discount is completely hopeless. The reality is that for the poorest families they are lucky if they can find one power company to pick them up. This kind of fantasy idea that the National Government has in this “La-La Land” that it lives in that the poorest people out there actually have a choice of retailer when they are lucky if they can find one to pick them up and keep them on shows just out of touch it is. We spent 9 years in Government trying to make the system work and it does not. The system is broken.Mr Bridges said that the Bradford reforms just need time to bed in. They do not. They have utterly and completely failed. Fifteen years—it is time to actually do something about the fact that despite having some of the cheapest electricity being generated—Hon Tau Henare: Tell me why we’re 51 percent in the polls tonight. How do you work that one out?MOANA MACKEY: I wish we could hook Mr Henare up to the national grid. All our power problems would be solved if we could hook his mouth up to the national grid. That is one big energy source over there. The reality is that tinkering is not going to make a difference. If we want genuine—genuine—competition in the retail market and that is what we want we need to change the way we price electricity. That is what the New Zealand power policy does. We are not regulating the retail market or the generation market. We are simply ensuring that retailers who want to come into the market are able to compete with the four big generation-retailers who up until now have been able to squash any real competition that comes into play.New Zealanders know that they are paying too much for power prices. The model that we have selected is one that is commonly used overseas. It is not something that New Zealanders need to be scared about. What they need to be scared about is what is in that next power bill when it lands in their letterbox and when they have to open it wondering whether they are going to be able to keep the lights on for the next month. That is what New Zealanders are scared of and a Labour-led Government is—