10% power discounts
Winston is a lot like Shane Jones – lots of natural talent, but allergic to actually doing the hard work. One example of this was when he fronted to the Electoral Commission’s review of MMP yesterday and rather then address any of the issues they are actually tasked with reviewing, talked about spending limits.
We see this lack of attention to detail, or well basic facts, in the request for a 10 per cent winter power discount for Super Gold Card holders to be included in next month’s Budget. Peters said:
New Zealand First is asking the Government to include a 10 per cent winter power discount scheme for SuperGold Card holders in the Budget next month.
Now this is a legitimate request. Personally I disagree with it, as assistance should go on the basis of need, not on the basis of age. Why should Winston himself get a 10% power discount, but not a poor struggling family? But lets even put aside the desirability of the policy, and look at the facts.
Rt Hon Winston Peters says a discount on winter electricity prices for SuperGold Card holders is the responsible thing to do in times of sharply increasing prices.
Actually he CPI records electricity costs have increased only 2.0% in the last year. Over the last three years the increase was 10%, of which 2.2% was the GST increase (which was compensated for), so an underlying increase of 7.8% over three years.
During the last term of Labour (when Peters was a Minister), electricity costs went up 22.9%. The previous three years it went up 23.8%. So the annual increase has fallen from almost 8% to just 2%. But let’s ignore both the policy flaws and the false rhetoric.
Under the New Zealand First scheme, the cheaper electricity would be supplied by the three State Owned Enterprise-power generators – Mighty River Power, Meridian and Genesis.
Okay here is the real flaw, which shows that this is just a press release masquerading as a policy. First of all, it can’t possibly provide a rebate to all SGC holders, when only some of the generators are included. Contact Energy is the second largest generator, providing 24% of the market.
The other flaw is that generators do not know whom the end customers are unless they are also retailers. You can not ask generators to provide a discount for retail customers. It’s like asking Fonterra to supply cheaper milk to pensioners.
Mr Peters says these power companies and the Commerce Commission act as a “price-fixing cartel” which sees domestic users pay more than their fair share.
“Domestic users are paying more for power than both commercial and industrial electricity users. This imbalance will only get worse if the government proceeds with its plan to sell off the power stations to foreign companies.
This is false. My apartment and business are with the same company. As a domestic user I pay 27.35c per unit (includes line charges), and my commercial business pays $33.43c per unit.
It would potentially benefit more than 590,000 SuperGold Card holders by about $100 on their cold weather bills.
“It would cost the highly profitable state-owned power companies about $34 million a year but these companies would benefit from a larger customer base.
So in fact Peters is proposing trying to wipe out Contact Energy by having the taxpayer subsidise the SOEs.
“The power companies can easily afford it and the changes can be enacted swiftly under existing legislation, or the Government can use new legislation already prepared by New Zealand First.”
Given Peters appalling attention to detail, I’d hate to think what their legislation would look like.
The issue of electricity affordability for those on fixed incomes, in winter, is a valid one. The proposed solution, is a typical PR stunt.
Incidentally the Government has said they won’t be legislating for a 10% discount, noting that the value of the pension for a married couple has increased $194 per fortnight since the 2008 election.