New electricity price reform ideas give 'power to the people'

Plenty to chew over in latest electricity pricing reform ideas, says industry.

There are strong signs of moving "power to the people" in the second report from the Electricity Price Review, says power retailer Flick, a vocal challenger to the current electricity regime.

Others in the sector say they're still digesting the just-released 39-page report from the independent review panel, which contains 41 suggestions for improvements to the electricity sector, but initial comments are largely positive.

The panel wants feedback on its ideas - generated by sector participants earlier in the review and by panel experts - by March 22, to help finalise its recommendations to the Minister of Energy and Resources by mid-year.

Flick, 70 per cent owned by Z Energy and formed to sell power on a spot-price model, has with Electric Kiwi, Pulse Energy, Vocus Group and Vector, formally complained to regulator the Electricity Authority. Their complaint says spot power prices have been unreasonably high and lack of disclosure by major generators, plus the inability to buy affordable hedge contracts, have harmed independent power retailers.

High spot prices saw Flick's customer numbers fall to a 15-month low in November. On November 30, Flick supplied 21,500 customers - 1400 fewer than in October and almost 3500 down over two months. Electricity Authority data showed it was the lowest count for the company since August 2017.

The authority is due to report this month on its investigation into the complaint.

A spokeswoman said Flick was pleased to see the Electricity Price Review panel (EPR) raise a number of the same issues it had in its complaint.

"We're positive about the direction the EPR is taking, particularly when it comes to the [suggested] prohibition of prompt payment discounts, and win-backs, toughening the rules on disclosing wholesale market information, to introduce mandatory market-making obligations and make generator-retailers release information about the profitability of their retailing activities."

Flick describes win-backs as "a dirty tactic ... the goodies that get dangled in front of consumers who switch power companies". The practice not only hinders market competition and disadvantages smaller retailers which have less financial power to offer rewards, but disadvantages loyal customers who have never switched power companies - 42 per cent of Kiwi households, said Flick, which also sells power to businesses.

The company said the EPR panel's suggestions to strengthen the consumer voice and for ways to help people suffering energy hardship, were among "some fantastic and significant" recommendations made in the panel's second paper.

Auckland-based Vector, New Zealand's largest distributor of electricity and gas, said the EPR discussion paper was initially, largely encouraging.

"It favours options that reflect the importance of new technology, greater resilience and improved customer choice, as well as options that improve market transparency and address practices that may stifle competition or unfairly penalise some consumers," a spokesman said.

Genesis, an electricity generator and retailer, said the EPR had recognised that the market was competitive but that more could be done to ensure more customers benefited from competition.

Chief executive Marc England said the industry was competitive and the generation sector was delivering secure energy supplies to the economy and greater levels of renewable energy.

"However, we also acknowledge that the full benefits of competition are not necessarily being accessed by all customers, for a wide range of reasons, and although we do not agree with all the recommendations, we welcome those aspects of the report that focus on initiatives to ensure more customers can access deals that deliver them the best value."

England said Genesis would take some time to review the detail behind the report, including the recommendation to remove prompt payment "discounts" but retain late payment fees. Genesis offers such discounts.

He welcomed the EPR's support for removing the low fixed user tariff, which had not worked as intended, and to develop a clear and common definition of "energy hardship."