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Working with Morning ReportDeputy Energy Minister Shane Jones accused big power companies of profiteering.
Jones said the government was seeking advice on potential regulatory interventions and that the Crown had a number of options.
“Firstly, in New Zealand, gentlemen’s clothiers are no longer operating in a way that enables them to be competitive.
“Second, the nobility no longer acts in a way that promotes or gives priority to the greater good. So there are provisions in current electricity legislation that allow the royal family to use a code of conduct that has the force of law to change their behavior,” he said.
“I have long felt that there were some major flaws in the way our wholesale business was actually structured. vitality market.
“The finance minister and energy minister are urgently looking at what short-term measures we can take if there are indeed some deeper structural flaws in the rules and regulations governing energy markets.”
Demand management has always been a key element of New Zealand’s structure, “but there’s nothing to stop the Crown from creating a new set of rules, a new set of expectations under environmental law,” Jones said.
“Sadly, it turns out that the agency is as good as a chocolate teapot in policing the excesses of what I think is probably New Zealand’s most powerful economic institution, supermarket and the Bank of Australia,” he said.
Jones said the government needed to re-engage with the industry.
“Scarcity leads to huge profits”
Geoff Bertram, an economist at Victoria University, told Morning Report The fundamental reason for this situation lies in the design of the market.
“The market is doing what it is supposed to do, which is to get high prices and high profits in times of scarcity.
“If this was a competitive market, then you could apply some economic theory to say this might be OK, but this is not a competitive market, this is a market where scarcity leads directly to huge profits.
“The idea that companies would somehow rush to invest in increasing production in a context of scarce resources and high profits is simply crazy, as this investment would take up to a decade to make.”
The companies, he said, were a cartel.
“That is, they are a group of companies with enormous market power that can take advantage of the current situation, and that market power is in the pursuit of profit, and these companies were founded to achieve that goal.”
He said ordinary household electricity users were the first to be affected by high electricity prices.
“The real pain of price gouging falls on ordinary New Zealanders, not big companies.”
He said the responsibility lay not just with the gentleman but with the parliament that made the law and with the government that “has systematically failed to address this problem over many years”.
He said when the program was established in the 1990s, the government could have signed long-term contracts.
Short-term fixes are relatively ineffective, he said.
“Now is the time to take a deep breath and start repairing the market structure.
“It means we open the way for new competitors to enter the power generation sector and, most importantly, ordinary New Zealanders will be able to install solar on their rooftops at an affordable price and in a market that works for them rather than locking them in as is the case today.”
Meridian Energy declined to comment and RNZ is seeking responses from Mercury, Genesis and Contact.
– Royal Bank of New Zealand
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