Timely freeze

If there were once only two certainties in this life - death and taxes - then during the past several years another has emerged: power price rises in winter.

And winter has come early this year, with the country in the grip of an unseasonably wet and cold blast - which has seen snow in patches over much of the South, and the central North Island, and record rainfall in and around Dunedin.

Consumers will have been cranking up their heating systems and doubtless anticipating larger-than-average power bills for this time of the year.

It comes as a welcome, and overdue, relief then to hear, in the wake of a damning report from the Commerce Commission on the strategies of state-owned power generator-retailers, that Energy Minister Gerry Brownlee is pushing for a price freeze.

More than that, there are indications the Government is going to look again at the entire market model for electricity developed and implemented when it was last in office during the 1990s.

The commission's report found that the big four generator-retailers - Meridian, Genesis, Mighty River Power and Contact Energy, the first three of which are state-owned - had overcharged consumers by as much as $4.3 billion during the past six years.

The commission said that it had found no evidence of price-fixing or market collusion, but that the four companies had used their market dominance to maximise profits through "lawful, rational exploitation" of the rules - with the result that wholesale power prices had been on average 18% higher than they should have been between the years 2001-07.

In addition, prices to the consumer rose by 72% over the years 2000-08 while inflation went up only 29%.

Given the huge salaries of executives in these SOEs, and the constant generation of public relations material to justify the regular price rises inflicted on the consumer, this is simply unacceptable.

It makes a mockery of the constant refrain by the same companies as to the reason their prices never fall - even when the hydo lakes are overflowing and the spot price for electricity plummets, as it did to zero at Benmore last weekend. This, they say, is because the consumer is shielded from extreme fluctuations by their carefully calibrated "middle-of-the-road" tariffs.

The reality, as the report makes clear, is that New Zealanders pay too much for power.

The competitive market model has not delivered cheaper electricity to the consumer and Mr Brownlee could not be clearer in noting the problems.

"There is something fundamentally wrong with the way in which we are marketing electricity in New Zealand," he said, adding that it would be "audacious" for power companies to raise their prices while a review conducted by a ministerial panel was in progress.

There is scope for party politics in all this and, unsurprisingly, it has been evident in some of the reaction to date.

Mr Brownlee has implied that the Labour Party, whose tenure in government the report covers, was negligent, and that the Electricity Commission, established by Labour to exert some influence over generation, prices and forward planning, has seriously misfired.

For its part, Labour can say it inherited the market model from National, and itself set in train the Commerce Commission report - which has been several years in the making.

Consumers could be forgiven for saying "a plague on all their houses".

Domestic consumers use only about a third of the power generated in this country and it has to be asked whether it is reasonable that they pay such a high tariff.

Certainly it is a finite resource to be used carefully, sparingly, and people should pay for it in proportion to their consumption.

But equally it is quite wrong that particularly elderly and vulnerable New Zealanders must retreat to their beds at all hours of the day and night simply to keep warm, while state-owned companies plunder ever greater profits from the sector.

It must be possible to strike a better, fairer balance.

The signals this week from the Government are promising, but now that the flaws and iniquities of the current system have been so publicly exposed, it must be held to account in addressing the fundamental issues in the coming months - as the real winter sets in.