Consumer poll puts electricity industry in poor light

Thursday, 16 January 2020

Consumers appear increasingly unconvinced that the electricity industry is working as it should.

Consumer confidence in the electricity industry has hit a new low, according to a poll conducted for the Electricity Authority.

Only 41 per cent of consumers gave the industry a score of more than 'five out of 10', when asked whether they thought the electricity market ensured electricity was generated and supplied efficiently.

The response was the most negative since the authority began polling consumers on that question in 2011.

Barely a quarter of respondents broadly agreed that the current level of competition between electricity retailers ensured the prices they paid only rose in line with electricity companies' costs.

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There was equal scepticism that the market ensured that the right mix of power stations would be built in time to meet growing demand for power.

Official figures show average annual power bills have fallen, says the Electricity Retailers Association.

'Performance of the electricity industry across all six key aspects tested dropped from the highs in 2017', pollster UMR said.

The survey was conducted by UMR in March and it wrote up the results the following month – prior to the Government announcing its response to the Electricity Price Review it commissioned in 2018.

But UMR's findings were only published by the Electricity Authority on Tuesday.

The authority said it did not intentionally hold back publication until after the review.

Grant Benvenuti, acting general manager of market performance, said it intended to publish results as soon as it could 'but sometimes our internal processes take longer due to competing priorities'.

There was a similar lag to the authority publishing the results of its consumer survey in 2017.

Energy Minister Megan Woods announced some changes to the way industry would work in October, including a ban on 'win backs' that is designed to ensure large electricity retailers don't wait until customers start to shop around before offering them better pricing.

Woods also indicated she would instruct the Electricity Authority and the Commerce Commission to have regard to the Government's objectives for more 'energy sector innovation', which is understood to be intended as a nod towards climate change concerns.

However, she rejected some submitters' calls for a deeper restructure of the industry, for example by structurally separating generators from retailers or undoing former national energy minister Max Bradford's market-oriented reforms of the industry.

The Electricity Retailers Association (ERA) noted that while the UMR survey showed 'a fall in some measures' since the survey was last conducted in 2017, the pollster's analysis noted that was mostly due to respondents giving neutral or unsure responses.

The ERA's members include the 'big five' gentailers, Contact Energy, Genesis, Mercury, Meridian and Trustpower.

Just under two-thirds of those polled gave electricity retailers a score of more than 5 out of 10 when asked if they were competitive, which was a better result than for banks and petrol companies.

'We have one of the world's leading energy systems in terms of price, resilience and sustainability, with the 10th cheapest electricity in the OECD and a very reliable supply of electricity,' chief executive Cameron Burrows said.

'That's partly down to New Zealand's abundant natural resources and it's also a result of a well-functioning electricity market that fosters competition and innovation,' he said.

Data from the Ministry of Business, Innovation and Employment showed the average annual power bill was at its lowest level in 10 years, down $160 since 2015, he said.

Figures from the Electricity Authority also showed smaller retailers gaining market share against the big five, Burrows said.

'That's great for customers to have power companies compete by keeping prices as low as possible.'