A recent article in Consumer NZ highlighted how we have fuel poverty in New Zealand with many New Zealanders struggling to pay their power bills.
To give an idea of the scale of the problem, last year more than 30,000 households were disconnected and 9,000 were disconnected during the winter months when they were unable to pay their power bills.
Disconnection of power means that for a period of time, most of these households have no heating, no hot water, no hot showers in their homes, no cooking, no lighting, and no internet connection to the world outside.
The tip of the iceberg
And this is just the tip of the iceberg in relation to fuel poverty, for in addition to these disconnections, more than 37,443 households were given hardship grants by Work and Income New Zealand in order to help them pay their power bills, mostly during the winter months.
And many more thousands of New Zealanders are taking extreme measures to reduce power usage such as not heating their homes in winter, raising families in cold damp houses; and this increases levels of asthma, rheumatic fever, and other serious illnesses, in turn placing pressure on our health and social support services.
Any further price rises will exacerbate existing levels of fuel poverty and will impact most severely on vulnerable New Zealanders, including the elderly, the sick, the disabled, those with young families, and those with insecure incomes
Asset sales ‘alarming’
This is why the recent moves by the government to partially privatise our public energy companies are so alarming.
Parliament has just passed the Mixed Ownership Model Bill, which removes the four energy state owned enterprises ( SOEs) – Genesis, Meridian Energy, Mighty River, and Solid Energy- from the State-owned Enterprises Act, the Ombudsmen Act, the Official Information Act, and parts of other Acts.
It creates a new schedule in the Public Finance Act for ‘mixed ownership model companies’ and put those companies in that schedule. The Bill then sets out conditions for sale of these mixed ownership model companies
The Green Party spoke very strongly against this bill for a number of reasons.
No social responsibility clause
One of our major concerns is that removing the four energy SOE’s from the SOE Act means that they are no longer bound by the social responsibility clause that all SOE’s are legally bound by.
This clause meant that the energy SOE’s had to consider the impact of raising the price of power on consumers and on economic growth.
Removing the energy SOE’s from requirement to comply with social responsibility means that, even if the Government retains a 51% majority shareholding in the companies, they are likely to get sued if they try to stop the minority shareholders from going in and maximising their profits.
The likely outcome of partial privatisation of our publically owned energy companies will be higher power prices for consumers.
We know that private companies at the moment have, on average, 12% higher power prices than the energy SOE’s.
Given the extent of fuel poverty that already exists, the likelihood of further price rises are of grave concern.