Grant Bradley: Low power prices? Don't hold your breath

Anyone expecting to see power prices fall after today's ministerial review of the electricity sector is in for a long wait.

Energy Minister Gerry Brownlee has been careful not to over-promise on this front - politically this messy sector is now officially his problem - instead saying he expects a "flatter price path" in the future.

It needs to be. Over the past nine years power prices have risen more than 70 per cent against a consumer price index increase of 28 per cent and in the report these are described as excessive, especially for residential consumers.

The review by a technical advisory group was more wide ranging than expected. It makes a set of recommendations which will be open to five weeks of consultation before the Government moves on them.

Among recommendations it says the problematic Electricity Commission should be replaced and as Brownlee has mentioned, consumers compensated when they are asked to save power during a conservation campaign.

One of the most important ways of encouraging competition the panel recommends is allowing lines companies such as Vector back into retailing, unwinding measures introduced by another National energy minister, Max Bradford.

"We have a limited number of retailers - there would be more buyers for electricity and more sellers."

This may be of more interest to rural lines companies and Brownlee says it will be "interesting" to see where the public discussion goes on this. But given some lines companies have run foul of the Commerce Commission for years for hiking distribution charges there may be reservations about them getting back into the retail scene.

State-owned generators come under the blowtorch for how they manage dry year generation - such as last year - and the panel recommends they take more of the risk and pay the price rather than passing it on to consumers.

One idea is to require a more orderly system of how one company buys power from another. A more radical recommendation is to have them swap power stations among themselves to strengthen competition.

South Island based renewable generator Meridian Energy would transfer its Manapouri power station to North Island based thermal generator Genesis Energy, in exchange for its gas generator at Huntly.

Brownlee says ministers would need a fair bit of convincing on this one - such a shakeup would cost millions. The review intriguingly says its largely in the hands of SOEs themselves to determine their future.

This risks consigning it to the "too hard" basket. These taxpayer owned companies are fiercely territorial, have rhino thick hides in the face of public criticism and seem to respond better to change when offered the stick rather than the carrot.

One area Brownlee sees as a quick solution to householders struggling with bills averaging $1800 to $2400 a year is promoting the ease of which they can switch power companies. The panel recommends spending an extra $5 million a year on publicity.

This will be a good one to take up. As power companies have learned to their cost, disgruntled customers are not afraid of making the switch if they see better value elsewhere.

* Grant Bradley is the Herald's Energy writer.