Between the lines: Second chance to pull socks up

By RICHARD BRADDELL

Should Energy Minister Pete Hodgson feel like the guy on TV who bought a dress but felt like he needed something else? His centrepiece electricity inquiry has reported and, for the most part, come up with generalised recommendations.

No silver bullets; no thundering endorsement of a CPI-X curb on the ability of electricity line companies to charge consumers whatever accounting sophistry can justify.

Mr Hodgson has reserved the Government's position for the next four to six weeks, meanwhile describing the inquiry's report as imaginative in the scope of its recommendations.

But there is more to the report than that. While its recommendations tend to be high-level, they unambiguously put the entire industry on notice that it needs to improve itself, or else.

Its recommendations for the wholesale part of the market cut to the chase, giving 12 months for the industry to tidy up a mind-bogglingly complex governance structure or have it done for it. In that regard, the inquiry also answers one of the more telling criticisms of the wholesale market, that it has been captured by generators at the expense of consumers.

To solve this, the inquiry has recommended that the three industry bodies be rolled into one, with a balance of non-industry participants on the governance board.

In the lines business, CPI-X rears its head, but only as a last ditch stand if a revitalised Commerce Commission concludes that a particular company is charging too much.

It will take time to get the Commerce Commission functioning at the level the inquiry envisages, and it will require yet another go at getting useful lines company valuations to determine if prices are unreasonable.

This is hardly the quick fix that the previous government's Energy Minister Max Bradford had in mind. But Mr Hodgson's rejection when in opposition of the blanket application of CPI-X was founded in the belief that it was too brutal because one size does not fit all.

Yes, it will take time. But at least the lines companies will know that if they are considered to be taking more than their share, they risk being put on a diet for five years.

The question remains whether the Commerce Commission is equal to the task. At least Mr Hodgson should have a good deal more than two years to intervene if the self-regulation preferred by the inquiry does not produce results.

Mr Hodgson also has a distinct advantage on Mr Bradford in that the issues are relatively well defined and, in contrast to Mr Bradford, he still has the goodwill of the industry.

The industry also knows that Mr Hodgson is duty-bound to show savings to consumers before the next election, even if the inquiry skirted round what they might be.