Press Release – New Zealand Labour Party

Labour’s Energy spokesperson David Parker says that complaints by Meridian Energy and Mighty River Power — that Genesis Energy quadrupled its normal prices while power lines were shut down for maintenance last weekend — provide yet more proof …David
PARKER

Energy Spokesperson

31 March 2011 MEDIA STATEMENT

National will make ‘pretend market’ even worse if it sells off state power companies

Labour’s Energy spokesperson David Parker says that complaints by Meridian Energy and Mighty River Power — that Genesis Energy quadrupled its normal prices while power lines were shut down for maintenance last weekend — provide yet more proof that there isn’t a competitive market in New Zealand.

“More than decade ago National claimed it was creating a competitive market in the electricity sector, but what they created is only a pretend market,” David Parker said.

“Electricity prices have a major impact on Kiwi families that are struggling to make ends meet. Excessive power prices are just that —- excessive —- no matter how you try to dress them up in commercial speak. They have a real impact on Kiwi families, and they will have even more impact if National sells off the state-owned companies.

“Truly competitive markets act as an effective constraint on costs, profits and prices,” David Parker said. “That’s why I believe in the efficiency of competitive markets.

“But the opposite is just as true. Markets that aren’t truly competitive don’t achieve fair or efficient outcomes. Instead they allow excessive costs, prices and profits.

“The irony in the case of Genesis at the weekend is that the ones complaining are fellow state-owned rivals. If they can see the truth, the Government should admit it.

“The trouble is National is blind to the truth because, for ideological reasons, it plans to sell off state-owned assets,” David Parker said. “Such a decision will inevitably lead to even more price rises.

“When Labour was in government, we commissioned a Commerce Commission inquiry into the New Zealand electricity market. It reported back last year that the four main generators, Contact, Genesis, Meridian and Mighty River, exercised their substantial market power to over-charge consumers by more than $4 billion — or by 18 percent.

“This is disgraceful, and National is now set on a course that will make a disgraceful situation even more deplorable.”

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