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Mercury NZ takes a crack at networks' threat to 'energy freedom'

Tuesday 7th November 2017

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Mercury NZ chief executive Fraser Whineray has lashed out at electricity network monopolies, owners of the wires that deliver power to consumers, saying they represent a threat to people's "energy freedom".

His comments to the NZX-listed, government-controlled electricity generator and retailer's annual meeting coincided with a report from the Electricity Authority that also questioned whether regulated monopolies, such as NZX-listed Auckland network company Vector, are using their regulated asset bases to subsidise activities where they face competition from unregulated businesses.

"We detected a lack of confidence in existing open or equal access arrangements" and would now "initiate a project to further investigate the reasons for that lack of confidence", the EA said in a "next steps" report for its project into Enabling Mass Participation in the electricity market. 

Vector dismissed Whineray's claim, saying traditional electricity retailers were facing severe disruption as well as a pricing inquiry under the terms of the coalition agreement between the Labour and New Zealand First parties to form the new government.

Whineray said there was "some noise developing about several monopoly network companies seeking to extend their reach into such things as when you can charge your electric car".

"Be wary of a smokescreen of new technology which is sold as trying to enable outcomes when the real objective is to control you and constrain your Energy Freedom," he said. "Having a monopoly network company extend its reach into your home or car is totally unnecessary."

He called for reform of electricity networks "to ensure pricing structures are simplified and made more equitable for consumers", saying "there is an opportunity now to get the regulatory settings right around emerging technology and the pricing of electricity distribution".

In an emailed comment to BusinessDesk, a Vector spokesman said: "We’re not surprised by the irony of these noises of distraction, given the level of disruption that the energy sector is facing and with a review of electricity generation and retail pricing looming. 

"Regardless, our focus will remain where it should; on continuing to lead energy innovation and deliver new customer solutions with the long-term interests of consumers in mind."

Both unregulated electricity retailers and regulated network owners are jockeying to position themselves as champions of competition as the whole sector tries to glean why electricity, which did not feature heavily in the election campaign, has been singled out for a pricing review in the coalition arrangements.

The EA's mass participation project aims to ensure a level playing field that would allow, for example, rooftop solar power production to be sold back into the electricity system fairly and to prevent existing industry players gaming the system to their advantage.

Among proposals it floats is allowing more than one electricity retailer to supply a single point of supply and questions whether networks are currently able to handle such arrangements.

Also controversial is the widely made allegation that network companies don't allow competition for support services, such as the emerging use of large batteries in local networks, which could drive network costs up.

"Many parties consider a market mechanism for the network support service is an important element of an effective open access framework. We agree," the EA paper says.

Vector has recently installed a large battery in place of a sub-station in the Auckland suburb of Glen Innes as it experiments with new ways to deliver reliable energy networks using new technology.


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