Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Power price rises main fear over asset sales bill

The dam at the northern end of Lake Karapiro in the Waikato. Photo / Sarah Ivey
The dam at the northern end of Lake Karapiro in the Waikato. Photo / Sarah Ivey

Struggling families will suffer because of higher power prices as a result of the Government's "mixed ownership model" and few "mums and dads" have cash to buy shares in the partly privatised power companies, MPs have been told.

Parliament's finance and expenditure committee yesterday heard dozens of submissions on the partial privatisation or Mixed Ownership Model Bill which paves the way for the sale of up to 49 per cent of shares in Mighty River Power, Genesis Power and Meridian Energy, and coal company Solid Energy.

The submissions were overwhelmingly against the plan.

Sarah Free of the Domestic Energy Users Network said she was representing the children of poor households who would lose out under the policy.

Parents of those children were struggling with their household budgets and attempts to save money on power bills meant their children were "suffering from underuse of energy" in the form of preventable illnesses linked to poorly heated homes.

Ms Free said the three publicly owned energy companies were doing much more to help poorer consumers than the private sector companies but she feared that would be undermined if they were partly privatised.

National MP Tim McIndoe said investors, including "mums and dads", had lost up to $6 billion in finance company collapses and the partial privatisation plan would give them the opportunity for a solid investment.

However, while Ms Free said there needed to be better investment opportunities, shares in partly privatised power companies would be unaffordable for many households.

"How are very indebted private households going to buy into these? Those people can't even afford to have a leaky roof repaired, or replace an unflued gas heater that's 20 years old nor can they afford to put in insulation even with a very generous subsidy.

"They have absolutely no spare money."

Submitting on behalf of Grey Power and the Domestic Energy Users Network, consumer advocate Molly Melhuish said she'd attended at least two public meetings where Prime Minister John Key said privatisation would have no effect on power prices. "I challenged that and he said 'you're wrong'."

But Mrs Melhuish presented data she said proved that on average domestic customers of privately owned electricity companies paid about $265 more than those with state companies each year. She said the mixed ownership model should not proceed until key regulatory issues in the market were addressed, including the "free market pricing" which enabled energy intensive industries to expand "at the expense of higher prices to domestic consumers".

Ngati Porou's Apirana Mahuika, Matanuku Mahuika and Horiana Irwin said Treaty provisions were not sufficient to protect Maori interests and the law should not proceed without alterations.

However, although Ngati Porou opposed the asset sale plan, should it go ahead the iwi wanted changes to allow it to participate more fully, including the removal of the 10 per cent shareholding cap for iwi consortiums.

Few, if any, of the 45 submissions heard yesterday were from supporters of the legislation. Labour MP David Parker said that was because "it's abundantly clear that they would be quizzed on the now indisputable fact that the Government is worse off through the SOE sales, by $94 million per annum and it's clear that New Zealand residential consumers will face increasing power prices".

SUBMISSIONS
* Dozens of submissions were heard yesterday on the partial privatisation or Mixed Ownership Model Bill.
* This paves the way for the sale of up to 49 per cent of shares in Mighty River Power, Genesis Power and Meridian Energy, and coal company Solid Energy.
* The submissions were overwhelmingly against the plan.

- NZ Herald

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