THE PRESS TUESDAY, SEPTEMBER 27, 1988. Getting power to the people

Press, 27 September 1988, Page 12

THE PRESS TUESDAY, SEPTEMBER 27, 1988. Getting power to the people

The Deputy Minister of Finance, Mr Caygill, is doing his bit to pave the way for the big

changes in electricity distribution that are still to come. In an address to the Electrical Supply Authorities Association last week, Mr Caygill rehearsed the shortcomings of the present system of getting power to the people, saying that the industry had been in a time warp for more than a generation. Just what measures the Government intends to use to jolt the industry out of this alleged time warp are not clear, but the answer should be available soon: legislation to effect the changes is due in Parliament before Christmas.

Just a year ago, a Ministerial study team recommended that all electricity supply authorities between Kaikoura and Ashburton should be amalgamated. After almost a year of investigation, the team of four appointed by the then Minister of Energy, Mr Tizard, in September, 1986, concluded that one large corporation should take over the electricity supply assets and activities of the North Canterbury and Central Canterbury Electric Power Boards, the electricity departments of the Riccarton and Kaiapoi boroughs, the Ashburton Electric Power Board, the Christchurch M.E.D., and the Port Hills Energy Authority. Among the benefits claimed for the scheme was a standard tariff across the region, which, according to the study, would have meant little change for Christchurch M.E.D. customers, a rise in charges for Central Canterbury and Port Hills consumers, and lower power bills elsewhere. The report was less than enthusiastically received. Subsequently, the new Minister of Energy, Mr Butcher, went further and said he was attracted to the idea of a single distribution authority for the whole of the country. He has since backed away from this alarming proposition; by early this year he was suggesting that the Government would set up several companies to run electricity distribution, “because the local government structure of the industry is inadequate for its more commercial future.” In July he announced another delay to the restructuring while yet another committee studied the

question, but legislation was promised by Christmas.

Even from these few official proposals, it is plain that a wide choice confronts the Government. The system eventually created will be presented as the most efficient and the best option for the consumer, but the accuracy of such claims will be a matter of interpretation. As a basic rule, no-one can seriously challenge the proposition that taxpayers and consumers should not have to pay a dollar more for public services and utilities than can be justified. The justification always will be a matter of argument: an argument about efficiency, about social

justice or the need for expenditure, about alternative ways of providing the services, or about whether they should be provided at all. In the debate about efficiency, sight should not be lost of the fact that electricity in New Zealand is a virtual monopoly. If the consumers of energy could switch readily from one fuel to another, from electricity to coal, or from gas to electricity, without huge capital costs, the argument might look stronger. In Christchurch, special considerations should just how vulnerable consumers are show restructuring of the electricity distribution industry be bungled: gas is not readily available; coal, for domestic use, is environmentally out; electricity holds the whip hand and will have even greater domination if open fires are banned. It could be argued that the creation of a few large distribution agencies entrenches the monopoly of the principal electricity generator, Electricorp. If Electricorp cannot be challenged by other energy suppliers, it should be kept up to the mark by supply authorities acting for the consumers. Mr Butcher might be waiting, wisely, for the reform of territorial local body boundaries to become clearer. Some alignment of electricity supply districts with these would seem desirable. The most important attribute of any new system would have to be the flexibility to change. If, as Mr Caygill says, the industry has been locked in a time warp for a generation, there would be little benefit in locking in into a different one for the next 20 years.