Who Benefits is a year-long Newsroom project examining lobbying and influence.
Our current investigation – Power Play – into the electricity industry’s influence is showing:
- The electricity industry helped formulate the National Party’s Electrify NZ policy
- Lobbying of government officials through a gentailer-heavy industry group, began just days after the National-led coalition Government was formed
- The industry worked on policy proposals with officials for months before other parties, including Māori/iwi, were invited to targeted consultation
- Initially, ministers ordered officials to work specifically with the energy sector
- Central and local government officials pushed back
- Under direction from ministers, policy changes made were strongly directive and enabling of renewable power stations, including re-consenting, but the industry didn’t get everything it asked for
- And Who Benefits? Faster, easier consents for power stations give greater certainty to generator-retailer companies but they’re under no compulsion to build them until demand increases and they stack up financially
- A steep drop-off in investments by majority government-owned electricity companies led to huge dividend payouts being dished out to the state and private shareholders
- Those high dividend levels have continued as power prices rise to levels not seen since before the Bradford reforms in the 1990s
When Geoff Bertram looks at today’s electricity system he thinks about rotary dial phones fixed to the walls of houses.
The ideal system for the 21st century isn’t like the one built in the 20th century, says the visiting scholar at Victoria University of Wellington’s School of History, Philosophy, Political Science and International Relations.
The dominant 20th century technology for electricity was big, centralised generators, he says, with a nationally organised grid and a single system operator at its heart.
Bertram says today’s system is suited to small-to-medium-scale, distributed suppliers generating power close to their customers – rather than a long way away, like hydro dams in the South Island generating power for Auckland.
“This is like the telecommunications transition from a big post office monopoly to highly competitive mobile phones with cell towers everywhere and multiple companies. Electricity is doing exactly the same thing.”
It’s the primary job of the government to create such a market, he says.
Our Who Benefits series has taken us behind the influence wielded by the so-called gentailers – the massive, profit-making companies listed on the stock exchange (and, in the case of three of them, part-owned by the government) that generate electricity and sell it to homes and businesses.
Industry figures tell us their sector is competitive, efficient and well-regulated. But critics say if this were true, prices would be lower and there wouldn’t be a need for the Government to consider building a liquified fossil gas import terminal as a dry-year back-up.
This isn’t a call from the fringes from a few voices; agitation for change is entering the mainstream.
In its ‘power issue’ magazine this winter, advocacy group Consumer called for: greater separation of electricity generation and retailing; changing how the market prices is set (based on the most expensive form of generation); creating an adequate back-up generation plan for dry years given our reliance on hydro-electricity; and for a bipartisan, long-term energy strategy to be agreed.
In the magazine’s editorial, Consumer chief executive Jon Duffy wrote: “Unavoidably, lowering energy prices will require investment, by government, the private sector and individuals who can afford to; for example, through rooftop solar and batteries.”
Even the industry review undertaken for the Government by Frontier Economics called for substantial reform.
“There are significant changes to existing arrangements required to achieve the Government’s goals,” said the report, released last year. “We are concerned that if bold changes are not made now, irrevocable harm could be done to the New Zealand economy.”
Now it’s time to look ahead; suggest solutions.
What’s an ideal electricity industry scenario?
Auckland would be “rampant” with solar, Bertram says.
“You fly into Auckland Airport and look down and look at all the people who make business calculations about whether to put solar panels on the roofs of those warehouses and factories in South Auckland. There’s not a solar panel to be seen.
“You fly into Melbourne and look down and you can see nothing but solar panels from horizon to horizon.”
What’s the difference? The Australian government intervened early on, Bertram says.
(The Sustainable Energy Association of New Zealand says rooftop solar is the cheapest way to reduce household electricity bills. Yet the uptake in this country is 3.5 percent – well behind Australia, where it’s 30 percent.)
Firstly, the Aussies regulated “feed-in tariffs”, guaranteeing the amount paid to solar panel owners when they sell surplus power back to the grid, providing certainty on the return on investment.
Bertram says there was also “pre-funding” – grants, in other words – for solar panels across the Tasman.
He remembers being in Tasmania in about 2004 when the state’s hydro-electricity system was reaching capacity.
“But knowing that the market was going to continue to grow, they simply did deals with households all over Tasmania, saying, ‘We’ll advance you the capital to put a solar panel on your roof’.”
Contracts were signed, and the savings fell into the pockets of householders.
In New Zealand, by comparison, feed-in tariffs are left to the market.
(The market doesn’t always get it right. SolarZero, the country’s biggest rooftop solar firm, provided a solar subscription service with no up-front cost, but the Blackrock-backed company collapsed in 2024. Customer complaints led to a Commerce Commission probe.)
‘It’s like me telling you to buy a CD player because you’re sick of the silence – it’s not really the answer that we’re looking for these days.’
Mike Casey, Rewiring Aotearoa
“It’s the capital cost that kills solar,” Bertram says.
“To put solar on my roof with a battery cost me about twenty-four-thousand bucks. It pays off over eight-to-10 years. I’m 81 – you go figure.
“So if somebody actually came to the door and said, ‘Look, we’ll pay for the cost of the panels on your roof and share the savings with you’, my signature would be on the document.”
Bertram’s advice to the Government borrows from the Australian example: guarantee the return on sale of solar power into the electricity network, and subsidise or underwrite the capital cost of solar.
(As reported in our opening piece, political parties are responding to dissatisfaction with high electricity prices, with several announcing loan schemes for solar installations.)
Re-orienting the country to solar would see smaller energy networks sprouting up that rely on solar, wind and batteries, Bertram says, and a reduced role for centralised, grid-provided power.
The problem is, he says, the economics of smaller networks can be killed by a “massive wodge of fixed charges” from grid operator Transpower.
“You need a market where a solar farm, for example, just out of Auckland, can sell into the Auckland consumption market using the Vector network, but not being hit for the full cost of the Transpower system.”
Bertram is also calling for a major regulatory shift allowing local mini-system operators to enter the national grid market, instead of being dictated to by Transpower. That would allow home-owners and small businesses to opt for solar and wind without incurring “unnecessary regulatory and cost burdens”.
The Electricity Authority responds
Asked to respond to Bertram’s comments, Transpower passed us to the Electricity Authority, the industry regulator.
Tim Sparks, the authority’s general manager of networks and system change, says transmission charges are decided by its pricing methodology, which “is designed so that those who benefit from the grid contribute to its costs”.
Lines companies – the local electricity distributors – decide separately how to allocate transmission costs to customers.
“Generators connected to local networks do not automatically pay the full cost of the national transmission system but will face some of the costs of transmission.”
Sparks says as part of its work to improve the efficiency and workability of the methodology, new rules came into effect in April, and more changes were announced in July – “that will stop inefficiently high up-front connection charges from rising further than needed, giving connection applicants greater certainty on what they can expect to pay”.
“We are currently considering a more enduring and comprehensive solution on this issue in an issues paper, which is currently out for consultation.”
Submissions on the paper close on August 24.
Mike Casey, the chief executive of the electrification advocacy group Rewiring Aotearoa, is a fan of encouraging more solar and batteries to be installed.
“I always talk about how 80 percent of homes with a nine-kilowatt system on their roof would give us 40 percent more generation for New Zealand’s electricity system. And the same applies to farms.”
This would have a “massive” effect in a dry hydrological year, when hydro-electricity lakes are low, and the system struggles, he says. Instead, the Government’s plan is to build a liquified fossil gas import terminal – paid for by electricity customers through a levy.
“We’re not building the energy system for 2050,” Casey says. “We’re, instead, trying to fix problems, like dry year, by investing in technology that is really already so out of date.
“It’s like me telling you to buy a CD player because you’re sick of the silence – it’s not really the answer that we’re looking for these days.”
Delivering electricity from power plants to run a household’s fridge and freezer is “pretty much half the power bill”, Casey says, so he’s urging the Government to hurry up and approve the ratepayer assistance scheme.
It uses low-interest loans, accessed through councils with a lower cost of borrowing, to install the likes of solar panels, batteries, hot-water heat pumps and double-glazing. The loan is paid back through savings.
Research by the Energy Efficiency and Conservation Authority (EECA) suggested $1000 could be saved from power bills each year.
“That’s something I’d like to get over the line this term,” Casey says.
The scheme should help pensioners, he says, who are often asset-rich and cash-poor. “The typical household in New Zealand will save $3100 gross per year by getting gas out of the home and putting solar panels on the roof and a battery in the garage.”
The next cab off the rank is solar programmes for renters which, Casey says, is a “little bit more tricky”. Putting solar panels on rented properties has an average 16 percent yield, he says. “The idea is, what is the mechanism to split it 50/50 between the landlord and the tenant?”
Casey would also like EECA’s Warmer Kiwi Homes programme, which offers grants for insulation and heat pumps in eligible homes, expanded to cover other green technology like solar panels, batteries, hot-water heat pumps, switchboard upgrades, and gas disconnection fees.
“But,” says Casey, “target that subsidy at the tenant who is living in the property, and give them agency to negotiate with their landlord”.
Clean, green electricity is reaching a critical mass, Casey says.
“There’s enough New Zealanders that have installed solar and batteries now, and enough New Zealanders that are getting gas out of their home that they’re telling everybody else just how much money there is to be saved.”
This “ground-up movement” is being noticed by the “political layer” in Wellington.
However, he acknowledges there’s a danger if the wealthy invest in solar and batteries and then quit the national electricity grid. “If we don’t incentivise people to stay we’re going to end up in a situation where … vulnerable New Zealanders are going to [pay to] maintain the grid.”
Who Benefits is a project tracking and disclosing lobbying and influence. If you know where influence is being brought to bear, email us in confidence at: trublenzOIA@protonmail.com
The power of the farm lobby
Part 1 A deep dive into proposed changes to freshwater policy
Part 2 Is a former farm lobbyist driving freshwater policy valuable expertise, democracy at work or a compromise to the public interest?
Environmental Defence Society
Part 1 examines a change of fortunes for one of the country’s most successful advocacy groups
Part 2 asks how a small team led for decades by one man has achieved outsized influence
Free Speech Union
Part 1 The rise and rise of the Free Speech Union
Part 2 A lobby group’s charm offensive and a doubting Thomas
Part 3 Seymour steps in and directs officials to consult
New Zealand’s gambling market
How monopoly money bought NZ’s gambling scene
Power Play: The influence of the electricity industry
Part 1 How energy-rich NZ became so expensive for electricity
Part 2 A new hope for renewable electricity
Part 3 The industry’s lobbying takes shape
Part 4 The officials strike back
(Bertram, the visiting scholar at Victoria University of Wellington, is calling for fixed charges – the cost, in your electricity bill, for being connected to the grid – to be abolished. There’s no rationale for this in an “open competition-for-the-market situation”, he says. “The gentailers ought to be responsible for getting their product to market.”)
Casey’s trying to engender a new style of patriotism, based on New Zealand-made energy, primarily electric, instead of foreign-made energy delivered by boat.
“If the boat stops showing up one day because China invades Taiwan our entire economy is fucked, it doesn’t matter if we grow five times the food that we consume because we won’t be able to run the tractors to make it.”
The byproduct of getting off “Saudi Arabia molecules”, he says, is reducing climate emissions. “But we’re not really talking about climate in the way we used to. We’re talking about it from a prosperity perspective now. And what’s right for New Zealand? Patriotism by New Zealand-made energy. That’s a much better thing for getting both sides of the political spectrum on board.”
Luke Blincoe, the chief executive of Supa Energy, a solar and battery start-up, says solutions to the electricity market’s flaws and frailties are tricky – partly because there’s a need for a dry-year solution.
Building a grid-scale solar farm is helpful for the total energy supply, he says, but for a retailer to sell energy to a book of residential customers they’ll need risk-management products to get them through the morning and evening peaks, when solar’s not helping.
“The market power has stayed with the incumbents across those firming periods.”
Supa’s bet is on what Blincoe calls decentralised power assets.
“We’re really a battery control play,” he says, “establishing a portfolio of solar and batteries, controlling those and being able to have a small customer book off the back of our own generation”.
It doesn’t install at a “rezzie” – residential – scale, rather it installs large solar and battery systems into big commercial buildings, schools, and community buildings. That means power is close to where it’s consumed.
Blincoe’s not a proponent of government subsidies which, he says, have caused distortions in other markets. “The economics stack up in their own right.”
The industry still has a “real centralised mindset”. “There’s a lot of sand in the gearbox, and complexity that doesn’t need to be there.”
He wants the Government to encourage the lines network companies to “move faster” on setting market prices for solar feed-in tariffs, which helps the business case for people “taking control of their own destiny”.
“You’re making a benefit of the broken market rather than being a victim of it.”
Our series, Power Play, has highlighted why many say the existing electricity market isn’t working: that households are struggling to pay higher electricity bills, while some businesses are failing, at least in part, because of them. All this while companies are making bumper profits and shovelling dividends to shareholders (including the government).
For decades, New Zealand relied on low electricity prices. As mentioned in our first piece, the 1990s reforms led to a market-based system, but the fundamentals were meant to be the same.
As the November 7 election date draws closer, and politicians make promises, it’s fair to ask them how much influence the industry has had over its policies. Also, when, exactly, their policies will lower power prices, and how they intend to change the market.
Because if there’s no plan to do either, the obvious question is: who benefits?
