NZ First, the Greens and Labour all eyeing change to the gentailer model

While it’s not something the National Party will campaign on, the electricity market is set to be a hot topic ahead of this year’s election as New Zealand First, the Green Party and Labour all think it needs to change.

NZ First has already indicated it’s something it will campaign on - with leader Winston Peters announcing during his State of the Nation speech in Tauranga on Sunday that his party is proposing to split the big power gentailer companies up into separate generators and retailers “so they could no longer control both the power and price”.

The Green Party has a Member’s Bill from MP Scott Willis sitting in the biscuit tin that aims to separate the generators and retailers. On Monday, Willis told interest.co.nz that he was writing to Peters “to offer him to simply support the Bill”.

As for Labour leader Chris Hipkins, he said he was leaving the door open to fundamental changes to New Zealand’s electricity market.

When it was put to Peters on Tuesday afternoon that Labour would be open to splitting up the gentailers, Peters said, "maybe there'll be two other parties from the Government [that] will be joining very shortly... come back tomorrow".

Asked if he had spoken to them, Peters said: "Have you spoken to them?"

When asked about the letter, Peters pulled out a sheet of paper with scribbles. “This is what I got. I’m trying to figure it out.”

Peters said NZ First was going to do something about power prices and as fast as they possibly could.

“Well I believe there are ways of doing this and some of them are going to be part of the exciting campaign announcements we’ll be making as we go into this campaign.”

The big four power generator-retailers are Meridian Energy, Contact Energy, Genesis Energy, and Mercury Energy. Currently, the Government owns a 51% stake in Meridian, Genesis and Mercury. Contact is one of the country's largest share market listed companies.

‘New Zealanders are being screwed'

When asked by RNZ on Monday if he wanted the big companies to be completely separate legal companies with new structures, Peters said yes.

The current system was set up 28 years ago and at the time, there was a proviso that prices would be regulated if future rising prices failed to plateau, Peters said.

These regulations weren’t being used and “New Zealanders are being screwed”, he said.

“We’ve gone from being a very competitive pricing regime for New Zealand businesses and houses … to now paying some of the highest prices in the world.”

There would be a costed policy, he said.

“New Zealanders understand that this is a critical industry and they’ve lost control of it.”

Asked if shareholders would be compensated, Peters said: “We’re not into wholesale nationalisation and compensating shareholders will depend on what the values are with the change of policy.”

Peters also spoke about solar power.

“We’ve been encouraging people to take up solar power. So if they want to and have got spare power and want to put it back in the system, are they getting one for one? Are they getting two for one? Three for one? Four for one? Five for one? No, they’re just being ripped off.”

Asked how this would be done due to having several lines companies, Peters said we should look at the system when there was “one outfit doing it all”.

‘Not operating as we need it to operate’

When asked if he would support a situation where NZ First or the Greens came to Labour with a proposal to change the electricity market, Hipkins told reporters Labour has dealt with this in government before with Telecom and Chorus - where the network and retail was operated by the same company.

“We did take action to create a more competitive market by separating those two things,” Hipkins said.

Supporting the Green Party or NZ First in breaking up the gentailers wasn’t off the table for Hipkins.

When asked if that meant he was leaving the door open, he said: “I’m absolutely leaving the door open to fundamental changes to our electricity market.”

“It’s clear the electricity market is not operating as we need it to operate.”

Labour would release a comprehensive policy around the electricity market soon, Hipkins said.

‘We can put it into action right now’

Meanwhile Green MP Scott Willis said New Zealand didn’t have to wait for an election to break up the big power gentailer companies.

The description of Willis’ Member’s Bill said it would “enable innovation and competition in both retail and generation markets and help drive down electricity prices for consumers”.

“It will achieve this by increasing access to electricity markets; fostering innovation and efficiency; preventing gentailers from cross-subsidising the supply of electricity to their retail arms at prices that cannot be replicated by independent retailers; clarifying the responsibilities of the Electricity Authority … [and] empowering the Minister to amend the Code if required to enact this amendment within a three-year timeframe.”

Willis’ Member’s Bill description said it would enforce separation of generation and retail functions; “to provide transparency, innovation, and competition for the benefit of consumers. There can still be common ownership but businesses must operate independently”.

Willis said his Bill was modelled off what happened with the telecoms industry.

Willis said his Member’s Bill was sitting there.

“It’s not just a promise from a leader but it’s a Bill. It’s ready to go and if New Zealand First wants to do it, then all they need to do is support my Bill and we can put it into action right now.”

“We should be a place where we have abundant renewables and we have energy independence. It’s all possible but not with this Government.”

Uncertainty

Prime Minister Christopher Luxon told RNZ on Monday it was not something that the National Party would be campaigning on.

“Our view is that splitting up the gentailers would drive a lot of uncertainty in the energy sector when we need a lot of certainty right now,” Luxon said.

He said the big focus was on more renewable energy and there was a lot of investment underway.