By JAMES GARDINER
As pressure grows from the electricity industry to be left to regulate itself, the Alliance caucus plans further discussions about what aspects of the Government's power package it can support.
Even if the industry-based "trust us" solution proposed by the David Caygill-led ministerial inquiry does get the Alliance thumbs up - and there are signs that it may not after the caucus met yesterday - opposition from the Greens may thwart Energy Minister Pete Hodgson's plans.
The Greens' support would be vital to any plans to regulate aspects of the electricity industry, or give legal status to its wholesale market structure and governance bodies, which are now voluntary.
Mr Hodgson has repeatedly refused to discuss the issue. His staff say the matter is working its way through the usual Government process and the result will be announced in due course.
But it is now clear that there will be no response this month, as Mr Hodgson had hoped when he received the Caygill report. It may not even be September, and October is when the Government had planned to introduce legislation.
The proposed response, largely driven by Mr Hodgson, officials from the Economic Development Ministry and, according to Herald sources, by Mr Caygill himself, has twice been before the cabinet finance and infrastructure committee, which has yet to reach agreement.
Central to the Caygill inquiry's recommendations was the establishment of an electricity industry governance board, a so-called "super board" with compulsory membership for generators, retailers, distributors and Transpower, the state-owned national grid company.
This would replace three existing voluntary structures including the Electricity Market, where three-quarters of electricity volume worth about $1.2 billion a year is traded.
Then there is the Metering and Reconciliation Information Agreement (Maria), which sets the rules under which electricity supply contracts are supposed to be formed.
And the Multilateral Agreement on Common Quality Standards (Macqs), which has the job of transferring responsibility for quality of supply from Transpower to the rest of the industry.
Most of the other recommendations centre on that proposal for self-governance. The idea of an industry ombudsman is presented as a consumer-protection mechanism, but is seen by some as mere window-dressing.
The cabinet committee paper outlining the proposed Government response deals at length with the concept of a "super board" and acknowledges the inquiry's "fundamental approach of industry self-governance as opposed to regulation by the Government."
Prime Minister Helen Clark had given indications that she supports the package, and sources say she told the committee last week that she wanted the matter tidied up in a way that did not further offend the business community.
It may not be that simple. The Alliance and the Greens are acutely aware that much of their voter support comes from homes that have seen little if any benefit from electricity deregulation and competition.
Ironically, in its present state the package could get support from National, which Mr Hodgson accused of creating the problem.
Small consumers are already angry over sometimes ridiculous overcharging - and even undercharging - on power bills, and the resistance they encounter when trying to switch suppliers.
There is growing evidence that small and even medium-sized households are simply not attractive to power companies and will face rising power bills, falling service and more disconnections if the Government does not protect them.
Deregulation in Europe and the United States is producing winners and losers on a dramatic scale.
The Guardian reported this month that San Diego residents had become laboratory rats in a scary economic experiment that could affect November's presidential election.
Told by the California state Senate that the end of electricity price regulation would lower household prices 20 per cent, the city's 2.6 million residents now face drought-induced shortages and pay an average 379 per cent more than last year.
A Reuters report last month said Europe's power prices were plummeting for everyone but the poor, not only because they lacked information about where they could take their business but because power companies were targeting wealthier households, offering cheaper electricity in combination with other services that the poor were unable to afford.
New Zealand has had some experience of this, with discount connections to Sky satellite TV offered to those willing to switch their power account to state-owned Meridian Energy. There is also the likelihood of single billing companies offering package deals for telephone, internet, pay television, power and even local authority rates and water charges (read: those on benefits in rental accommodation need not apply).
A quarter of Britain's 20 million households suffer from "fuel poverty," according to Reuters, meaning at least 10 per cent of total income goes on home heating.
Because of the number of Maori in low-income households and in isolated areas like Northland and East Cape, where transmission charges are higher and building insulation standards lower, anything that pushes up power bills to small users will be a major setback for the Government's policy of closing economic gaps with non-Maori.
The Greens have been wary of taking a strong public stance while the cabinet committee continues its work, but party leader Jeanette Fitzsimons is a longtime campaigner on environmental issues.
Indications are that the Greens will support a package dealing solely with consumer protection issues regulating line companies and possibly energy prices.
But they want more detailed consideration of the big issues of the wholesale market, the effects of competition between generators on the environnment, and sustainable use of resources for new generation.
The Alliance has yet to show its hand, with leader and Deputy Prime Minister Jim Anderton anxious to maintain the partnership with Labour.
Consumers Affairs Minister Phillida Bunkle is said to be genuinely concerned whether the industry can be trusted to govern itself and still protect the interests of consumers when it has such a poor track record.
Mr Caygill's role has been central. He not only chaired the inquiry, he has been closely involved in the industry and is also a link back to the deregulating and privatising 1984-90 Labour Governments the present Administration was so determined to distance itself from during its nine years in Opposition.
In that regard, it is notable that the inquiry recommendations, if accepted, would serve to protect the privately owned sector of the industry such as United Networks by not making them subject to the same public scrutiny under the Local Government Official Information Act as community and consumer trust-owned networks like Auckland's Vector and Hamilton's WEL.
It also proposes giving the super-board control over the pricing of state-owned Transpower, which would put members of that company's board in the seemingly impossible position of having to abdicate their responsibilities as directors under the Companies Act and State Owned Enterprises Act.
There are signs Helen Clark has realised that the issue is too complex and politically charged for Mr Hodgson to handle alone. He has not won over the Alliance ministers and has alienated the Greens.
The package was due back before the finance and infrastructure committee next Wednesday, but the Prime Minister is said to want it held until the following week when she returns from the United States.
Meanwhile, the industry leaders, representing the major generators (three of them state-owned) and the network monopolies, appear to be attempting to pre-empt the Government's decision, either oblivious to the political difficulties - or in defiance of them.
At a cost of several million dollars, they are forming an interim governance board, which they seem to think can rule all the players through private agreements, and at the same time include participants from competing companies without falling foul of competition law. The companies' response to a Commerce Commission warning in June that such get-togethers potentially breach existing electricity industry law and competition provisions of the Commerce Act was to surround themselves with lawyers - again at the expense of consumers, of course.
The cost of the inquiry, including the costs to the 477 who made submissions, would easily top $2 million, but that is chickenfeed in the context of the reviewing and restructuring that has occurred over the past dozen years.
The pricetag on that is estimated at well over $100 million, all of it from the pockets of taxpayers and electricity customers and yet not sufficient to prevent the power crisis of 1992 or the Auckland blackouts of 1998.
Already there are signs that those costly disasters may not be merely memories.
The new Otahuhu B power station in South Auckland is out of action for at least six months, and two of the state generators, Genesis and Mighty River Power, now have the opportunity to drive up prices, particularly over summer when Waikato River temperatures rise, constraining the output of Huntly, which relies on the water for cooling. Any failure at Huntly or one of the other northern thermal stations would bring back the prospect of blackouts.
On that score, consumers could justifiably be alarmed by an appendix to the proposed cabinet paper reminding ministers that a central part of the electricity market is that the risks of supply lie where they fall.
In other words, the Government is no longer responsible for any shortages - and nor is anyone else.
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