The Government needs to rein in the power co’s with restrictions on what they can and cannot do. Like many others I felt the pinch this week when my power bill arrived in the letterbox. My electricity consumption was lower than last winter, but the bill was higher than any I have ever received before. I felt disempowered.
There must be something we can do I thought and went to investigate. However attempting to make sense of price movements from sources such as Consumer’s “Powerswitch” is a daunting task. In the final analysis the savings appeared to be minimal, which probably explains why less than 14% of consumers switched their power co in 2009. This movement in spot prices is the electricity market in action, held up as the efficient mechanism by which all values are upheld.
My heart goes out to the elderly resident who spoke at the Council meeting last week about the struggle for people on low incomes and the recent power price increases. For many people on fixed incomes, changing their power co brings little relief and understanding the movements in electricity prices is beyond most of us mere mortals. The increases faced by consumers are compounded by rising rates, increases in GST, rising fruit and vegetable prices in response to unseasonable weather conditions and a likely increase in the cost of insurance as insurers seek to recoup the costs of the Canterbury earthquake. We all pay for natural disasters, or unseasonable events, one way or another. This latter issue is the paramount reason why insurance schemes should remain public and government controlled, without the necessity to return a profit. In private hands, the public pays twice for insurance.
However the current neo-liberal focus of the National government appears to be softening the electorate up for more privatisation if it is elected for a second term. This is not the result a rush of blood to the head for John Key. In fact, the National government has been dishing out this kind of “take your medicine” policy since Muldoon started throwing his toys out of the cot. Jenny Shipley’s abuse of the nation imposed a collective depression on the country and Ruth Richardson’s policies were the equivalent of a collective attack by a pit bull. In the current climate, with the Power co’s sitting out the front of media attention as a prime example of the failure of privatisation, the government’s chances of achieving a second term are less likely.
Trying to keep warm in winter with our draughty, cold, uninsulated, leaking, mouldy housing in NZ is a daunting task. In a recent survey of landlords I undertook last summer, 75% of the rental houses were either uninsulated or had insulation that was old and due for replacement. In a submission to Mrs Turia earlier this year, seeking full subsidy for insulation and heating schemes for people with disabilities, I estimated that 75% of people with disabilities suffer from fuel poverty. Overseas comparisons suggest that approximately 60% of older people suffer from fuel poverty. This means they spend more than 10% of their income heating the house and frequently live in cold houses.
New Zealanders generally frequently have houses well below the recommended WHO indoor temperature of 18-20 degrees Celsius.
Electricity is a necessity of modern life and a public good. In most European countries there are generous subsidies for having energy efficient housing and the government assists people on low incomes with additional payments in winter months. Incentives for landlords encourage thermal efficiency and clean heating. Thus there is an emphasis on energy conservation which is more equitable than forcing people on low incomes to pay high electricity prices. Pricing as a means of conservation has proven ineffective. The rich just pay up and go on squandering while the poor suffer.
The hardship caused by rising electricity prices results in the government having a responsibility to act. This hardship creates a need to rein in the power co’s and create a more equitable market in energy consumption. My recommendation would be to require more public control of power co’s, with an immediate price freeze, a cap on executive salaries and a ceiling on profits. The ceiling should be set at what is reasonable to meet infrastructure needs. Any profits over and above this ceiling should be returned to customers by means of an electricity discount. However, where investment in infrastructure is needed and the resources are genuinely not available from within the power co, the government should consider a contribution from the public purse.
My suggestion of more regulation is likely to be greeted with howls of derision by the current government. “Nanny State” I hear them all cry. However, wasn’t the nanny state good with its strict building codes in the recent Christchurch earthquake? Regulation has a role in protecting people and ensuring they are not exploited. If electricity is not affordable, it has a direct effect on the health and well being of the nation’s citizens. Healthy people produce prosperous nations.