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Entry 892, on 2008-11-18 at 21:24:21 (Rating 3, Politics)

About nine years ago the previous National government created the current electricity system we have here in New Zealand. Previously the state controlled generation, transmission and retailing, but after the reforms there was a competitive system where the consumer could choose who to buy power from and that supplier might have the choice of who to buy the generation ability from.

Why did they want to change from a simple, effective system to the complicated mess we have now? Simple really, the old system worked in practice but it just didn't work in theory. Yes, that's right, they were driven by ideology instead of practicality. I often think of it as the parting gesture of the right-wing National government before it was removed from power.

Recently, one of the major providers, Contact Energy significantly increased its prices as well as pushing through big increases in pay for its top executives (see my blog entry "Almost Criminals" of 2008-10-24). Competing companies have claimed that 10,000 customers have moved to other providers as a result, although Contact deny the number is that high.

I am a current Contact customer and am about to change to a new supplier, which will be either TrustPower or Meridian. I have talked to several people about this and it seems that many of them are making the decision to change as a protest more than as a way to save money.

The fact that Contact offer customers a $100 one time bribe to stay shows how out of touch they really are. They just think a bit of cash will solve any problem. If they asked me what they would need to do to make me stay I would answer: get rid of all of your foreign shareholders, fire the entire board and the management, and start again. Actually, I am pragmatic so I would also accept a big enough cash bribe... but it would need to be big. Hey, I have principles but there are limits!

So the free market seems to be failing yet again. There has been insufficient investment in new generation facilities, there has been little real competition, and the greed and ignorance of the business community has once again become apparent. Plus we have just elected another right-wing government. All I can do is make my small protest and give Contact the boot!


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