By Felicity Wolfe
Mighty River Power wants all electricity lines and transmission charges to be billed separately from retail electricity costs.
Chief executive Doug Heffernan says legislation proposed by Labour energy spokesperson David Shearer to have all components listed on all power bills does not go far enough.
Mercury Energy customers in Auckland have been able to see the energy, lines and transmission components of their charges for 15 years.
“But it hasn’t made a scrap of difference in removing the confusion.”
Heffernan, who will leave Mighty River after 16 years in August, told Parliament’s commerce committee he is “heartily sick” of electricity cost increases being blamed on the retail sector.
“Our view is that David Shearer’s bill needs to go further and it should require complete bill separation – separate invoices between the lines component and the energy component,” he said.
“I can’t cause that to happen – only policy can do that. Separate the bills and be done with it, quickly.”
Answering Green energy spokesman Gareth Hughes’ query around energy price increases for Mercury customers, chair Joan Withers said the company is currently in the midst of a “price freeze” until April 1, 2015.
Heffernan says any fixed-term offers the company has extended remain locked in at rates that cover all costs.
“When we make that offer we are taking the risk of what might happen with transmission and distribution costs.”
Single buyer model
Heffernan told the committee that politicians need to consider the World Energy Council’s energy trilemma model before making changes to New Zealand’s energy markets. The trilemma attempts to balance the energy policy objectives of secure supply, affordability and environmental sustainability.
To date New Zealand is the only country where major renewable generation has been built without using subsidies, he said. Mighty River’s geothermal investment programme over the past decade, including the $474.7 million Ngatamariki plant, has been a key driver in reducing the country’s reliance on coal-fired plants, he said.
Mighty River last month announced it will review its use of the gas-fired 175 MW Southdown plant, due to the gradual squeezing out of thermal generation by geothermal.
But Heffernan told MPs that Mighty River would not have built its geothermal plants under the Labour and Green parties’ single-buyer model. The 10-year build cycle would have been too risky an investment compared with “fast-start alternatives”, such as gas-fired generation.
“What would you change to prevent that undesirable outcome? Because ultimately you have to secure that trilemma. If you do not secure that trilemma consumers will pay – either through higher prices or poorer security or a dirtier environment.”
He says the lack of detail around how the single-buyer model may work is not surprising given the opposition parties’ more limited resources. Although he is leaving Mighty River, he encouraged Labour and the Greens to engage with the businesses to help develop “sound policy” which continues to support renewable development.
Glo-Bug
Heffernan also stood by the firm’s GLO-Bug, pay-as-you-go product, saying about 85 per cent of its users have reduced their household electricity bills by $300 per year – a 15 per cent saving on average.
He says it is important to compare tariffs of pre-pay plans with what people would otherwise be on. Once this was taken into account, GLO-Bug customers are saving money.
While the product is more expensive per kilowatt than Mercury Energy tariffs, it helped people living week-to-week who struggled to cope with post-paid monthly billing cycles. He says access to many competitors’ lowest-priced plans rely on people paying “on-line, on time” through direct debiting of online bills.
“Unfortunately, these are people who can’t do that. They haven’t been able to be on those plans because they can’t meet the terms and conditions.”
He says competitors’ pre-pay plans are “significantly higher than GLO-Bug”, but Mighty River also had to pay for the several million dollars of technology investment the brand had used to start up.
Email: