The Electricity Authority says it has found evidence of market abuses in the electricity market.
The findings come hot on the heels of similar findings by the Commerce Commission looking into supermarket practices.
According to the industry regulator, the large, dominant electricity generators have been overcharging for the electricity they produce. Further, they've unnecessarily spilled water that could have been used to generate electricity.
They've also engaged in what the regulator labelled "economic withholding". That's a fancy way of saying that if generators provide less electricity, they can get a higher price for the electricity they do produce. They can do this and make a profit because of their size.
This activity largely goes unchecked, and only becomes apparent when they get the math wrong - such as on August 9 when some households had to go without power on what was the coldest night of the year.
Ten years ago, Meridian itself warned that market manipulation could result in higher prices for consumers, and if the regulator, the Electricity Authority, didn't act, it risked creating an "anything goes" environment.
At Electric Kiwi, we are not sure whether Meridian's warnings were prescient or simply a self-fulfilling prophecy.
The regulator's market review also found Meridian is supplying the Tiwai Point smelter well below cost, apparently offering electricity at just 3.5c/kWh while Kiwi families are paying retail prices of about 30c/kWh. Who wouldn't want electricity at that price?
To rub salt in the wound, the authority has found the subsidy to Tiwai is being recouped through higher prices for everyone else.
The Electricity Authority estimates Kiwi families are each paying an extra $200 a year to cover the cost of Tiwai alone. That's before you even consider the other instances where market power is being abused by generators.
The regulator has fixated on the Tiwai contract, but that's only a symptom of the problem rather than the cause.
It sure feels like a slap in the face when Cameron Burrows, spokesperson for the Electricity Retailers Association (whose membership represents 90 per cent of New Zealand's
generators) wrote in a recent Herald column that "no one likes to pay their power bills".
Let's get it straight - no one wants to pay for Tiwai's power before their own hiked-up bill.
So thanks to the lack of competition amongst electricity generators, what they have charged over the last four years is nearly double what it used to be. That's an extra 6c for every kWh you consume going to Meridian and the other big generators, or nearly $500 extra each year if you are an average Kiwi family.
Kiwis have had a difficult time of it over the last couple of years, with Covid-19 and lockdowns. It's high time the Electricity Authority put Kiwi families and businesses first.
The Commerce Commission has some good ideas about what is needed to increase competition between the supermarkets. These ideas include wholesale regulation, new suppliers, and the big guys divesting some of their assets.
We reckon those kinds of changes to the electricity market would result in more competition and lower electricity bills.
That's why we're standing up for Kiwis. We're advocating for the Government to set up a new generation business with the aim of using assets like the Manapouri power station to offer real competition that will drive lower, fairer prices for all Kiwis.
It wouldn't be difficult. The Government did it with the break-up of Telecom, and when it originally set up Meridian and the other large generators in the late 1990s.
At a time when the world is grappling with the challenge of decarbonisation, it's imperative that New Zealand doesn't squander our natural advantage and the hard work of our grandparents by allowing greed to derail electrification of our economy.
Now it's up to Energy Minister Megan Woods to look at how electricity market reform can help build a better future for our kids and grandkids.
Let's come out on the right side of history.
• Luke Blincoe is chief executive of Electric Kiwi.