International Socialists

Wholesale prices for electricity at a record high; Trustpower warning we could face blackouts if rainfall does not boost hydro storage levels; power companies turning new customers away and the power bill for working people becoming more and more of a burden in the family budget: welcome to the new post-market reform electricity order.

 

"Giving more power to the people has been the goal of successive electricity reforms" wrote The Press on 4 August. "Time and again they lauded the more-market model as the panacea for New Zealand's power problems. Now the architects of this model must acknowledge they were wrong." But the silence from National and its ideological allies has been deafening. How do you spell "scam"?: D-E-R-E-G-U-L-A-T-I-O-N. None of the assorted crew of National Party MPs, Big Business leaders, Business Roundtable "think tankers" or ACT attack-dogs who set up the whole market model mess have taken even a little bit of responsibility for the problem.

 

The deregulators promised a period of robust competition, brought on by the breakup of the different parts of the old Electricity Corporation of New Zealand (ECNZ). Consumers would, they said, have hundreds of power companies to choose from, and the competition would drive prices down and inspire technological innovations that would cut energy costs even further. The reality has turned out to be different. In many areas such as Christchurch and the West Coast customers are denied choice through a simple lack of competition.

 

This, Consumers' Institute chief executive David Russell says, "makes a mockery of the electricity reforms." Meanwhile in other centres new customers have been turned away by companies unwilling to take the costs of wholesales prices themselves. Company profits are being maintained in the same way they always are, by passing costs on to customers and by attacking their workers' conditions.

 

And if, like me, you're on a very limited budget then you'll know what a difference the new cost of power makes. Just to show what absolute hypocrites they are, some companies are now offering special deals to customers who can make extra special savings! What grubs!

 

Of course as socialists we promote conservation and caring for the environment. But we will not - as Energy Minister Pete Hodgson seems to have conveniently managed - let workers' genuine concern for the environment be used as a cover-up for the power companies' cock-up. The current power crisis is a result of the madness of the market model, not a lack of rainfall.

 

 

Crisis? What crisis?

A leaked report from Energy Link consultants raises serious questions as to whether there is even any need to "conserve" electricity at all. According to a 9 August story in The Dominion, the report questions why state power company Meridian Energy suddenly became more conservative managing the key lakes in the Waitaki catchment, and why it raised its wholesale electricity prices at the beginning of June.

 

Energy Link is an adviser to Meridian's competitor, On Energy.

 

Meridian recently bought On Energy's 116,000 South Island customers. In June On Energy claimed that electricity generators were jacking up wholesale prices to force it out of the market. Energy Link's report says that as well as possible concerns about low storage levels, commercial reasons might be behind Meridian's conserving water and raising its wholesale electricity prices.

 

With this extra customer load, and a key competitor out of the way, Meridian felt able to raise prices. Another reason suggested in the report could be to make its proposed new hydro project on the lower Waitaki River look more attractive because of the higher prices and the need for more hydro in the South Island.

 

Looking further than the complex manoeuvrings of the power companies, it is clear that at least some are deliberately using the "crisis" - real or not - as an excuse to raise prices for domestic customers even further - raising prices is, after all, we're told, how "the market" deals with an electricity shortage.

 

 

Public power: the only solution

The only genuine solution to the power crisis is to take the profit motive out of the electricity business. The state could take over the entire production, distribution, and servicing of the electrical system and run it as a public service. The private energy companies like Contact, Trust Power, Meridian and their gang will never go along with a return to proper public power, so the Government should use the same power they had when selling off our assets without consulting us in getting them back.

 

We can negotiate reimbursing the companies after the electricity market has been re-nationalised, not before. There are many benefits to public power, especially for workers and the poor. First, all the profits that the private corporations are currently passing onto their executives and their stockholders could either be reinvested in the system or passed on to consumers through lower prices. Second, by eliminating the need for these companies to perform to the business model, better-paying unionised jobs could be guaranteed. We could guarantee electricity to the poor, the sick and the elderly regardless of their ability to pay. Lastly, we could democratically elect representatives to supervise the system who would be much more accountable than a handful of rich and greedy CEOs.

 

The power crisis is part of a broader crisis caused by the New Right reforms in this country. It's a symptom in the same way that student debt, underfunded state schools, poor employment conditions and tax breaks for the rich are all symptoms of the capitalist sickness. The power crisis isn't something that is natural and a result of the weather - it's something that is made, and can be changed.

 

We need to turn workers' despair at the size of their bills into a real anger. We need to convince people this system can be changed. If the despair and frustration that is out there can be organised into petitions, phone calls, public meetings and protests a real movement to take profit out of power then we might come out of this latest electricity crisis as the victors instead of the victims. The fight to get the market out of electricity must be seen as part of the fight against fees and debt, against health and welfare cuts, against spending on arms instead of housing and against the intrusions of the market.

 

But the fight for public control and ownership also needs to be linked to the struggle for public ownership and democratic control over all of our resources and institutions. Price gouging, pollution and profiteering were features of the old Electricorp and ECNZ as much as the current set-up. The same logic that says power is a good that should be democratically and publicly controlled and allocated to all equitably, applies to water, food, health care and other essentials that have been turned into commodities to be bought and sold for profit under capitalism. The current electricity crisis exposes the failures of the market and why we need to struggle for a socialist society.