The graph above says it all; the electricity “reforms” of recent decades have not led to greater efficiencies and lower prices, as promised by successive governments under Treasury’s sway.
Instead, residential consumers have been forced to subsidise commercial and industrial customers who have the financial, analytical and legal resources to pressure the electricity sector to keep their prices down.
On the supply side, the sector’s profits have increased substantially, largely due to their ability to manipulate the “marginal cost” pricing system – see the graph below:
In effect, New Zealanders have swapped a low cost, public-service electricity system for a wide “choice” of high-cost suppliers, each of whom seeks to maximise shareholder profits by manipulating the market at our – and the environment’s – expense. Here’s just one example.
Victoria University economist Dr. Geoff Bertram has written about this previously here and here, and, now retired, recently gave a highly informative slide presentation to the group Engineers for Social Responsibility.
Dr. Bertram explains how the Tiwai smelter and Huntly power station are used to keep power prices high, and concludes with ways to reform the electricity sector to create a fairer, more equitable market for this essential commodity.
A Youtube video of his talk, including questions at the end, can be found here.
NB: For those new to the topic, here’s a useful overview of the history and structure of New Zealand’s electricity sector.