National MP doubts electricity industry 'tinkering' will reduce power bills

National's energy spokesperson is criticising the Government for not specifying exactly how much power bills will be reduced following its industry shake-up. 

National MP Jonathan Young said it is not good enough that the Government failed to identify how much the proposed changes will reduce Kiwis' electricity bills each year. 

"Most of the changes merely tinker around the edges of the electricity market and won't undo the damage caused by the Government's failed energy policies."

Newshub asked Prime Minister Jacinda Ardern when New Zealanders will see their electricity bills reduced as a result of the Government's proposed changes.  

"We're moving as quickly as we can on regulatory reform because we know this is a major cost of living issue for New Zealanders and there are things we can fix," she said. 

"We've announced today what those will be and we're moving quickly on them, then we hope to see that flow through to consumers as quickly as possible."

Energy Minister Megan Woods announced on Thursday the Government's response to the final Electricity Price Review which recommended prohibiting prompt payment discounts but allowing "reasonable" late fees.

Woods said the Government welcomes the recommendation, but rather than immediately regulate retailers, she will write to the industry with the "expectation they make discounts available to all consumers". 

Young said removing prompt payment discounts while retaining late payment fees would "punish people who pay their bills on time". 

National's energy spokesperson Jonathan Young.
National's energy spokesperson Jonathan Young. Photo credit: Facebook

That's despite the review estimating customers would save $45 million a year if power companies followed Meridian Energy's example and ending prompt payment discounts. 

Financial budgeting service FinCap supports the removal, pointing to similar concerns that it's a "disadvantage for people living on low incomes that may not have the cash flow to receive the discounts". 

But Business NZ's Energy Council chair David Caygill warns some of the issues are not straightforward and could have outcomes that run counter to the Government's desire to hold electricity prices down. 

Some of the Government's other proposals include setting mandatory minimum standards to protect vulnerable consumers, and strengthening industry competition by making it easier to move to a different provider. 

Power companies will be required to put information about how to make the switch, in the communications they send consumers.

The review also raised questions about whether generators are making excessive profits at the expense of consumers, which it said risks undermining confidence in the wholesale market (the sale of goods to a retailer). 

Prime Minister Jacinda Ardern speaking to the media in Wellington.
Prime Minister Jacinda Ardern speaking to the media in Wellington. Photo credit: Newshub

Despite the review finding no evidence to support this, the Government is welcoming the recommendation to require those companies to report on the financial performance and to use a common set of rules. 

The Government's response to the review comes as residential prices have risen 48 percent since 2000, faster than those in other OECD countries.

"Ultimately, this is what the review and the announcements we've made today are all about: tilting the playing field back towards the consumer," Ardern said.  

She said she wants to see "more competition", discounting shared more evenly, and the Government ultimately dealing with the "lack of competition that we have in our electricity market". 

Young said despite the Government's best intention to reduce electricity prices, the ban on new oil and gas exploration will "increase weekly power prices for New Zealanders, increase global carbon emissions and risk our energy security". 

He said National supports a "competitive electricity market that is affordable, secure and reduces carbon emissions in the most efficient way possible".