Businesses, opposition slate government's 'weak' energy reforms

After a major report, the government has announced it plans to look for investment into natural gas imports, and will offer to help fund more generators.

It has told the major power companies it's willing to use taxpayer funds to back "rational" electricity projects with fresh investment.

But its response to the report on Wednesday has stopped short of a major shake-up - leading to fierce criticism from businesses and the opposition.

The Major Electricity Users Group said the proposed changes won't affect prices much for at least 10 years.

John Harbord chairs the group which represents manufacturers, supermarkets, data centres and other businesses with high energy needs.

He said while there were some good things in the package, "there's nothing in this that's going to make a difference to affordability over the next decade and so the risk of de-industrialisation, the loss of jobs, that's going to continue; this doesn't address that".

Harbord said the government offering more capital for generation probably will curb prices in the long term.

"But the package is lacking strong action on affordability and competition, to tackle immediate concerns facing businesses and households.

"Power prices for industrial users have risen 45 percent over the past two years. Prices are too high now and any further increases may result in more of our industrial businesses closing."

Independent electricity retailer Electric Kiwi is also underwhelmed by the government's planned changes, which it says lack ambition and won't bring down household power prices.

Chief executive Huia Bert told Nine to Noon the big four gentailers should have been split into separate retail and generating companies.

"We're really disappointed. This package shows a lack of ambition and a lack of understanding of how Kiwi households are really hurting from high energy prices."

She said the current market structure incentivises the gentailers to underinvest in new generation and keep competition out.

Bert said today's measures might only shave 2 percent off a household electricity bill that was rising by 10 to 12 percent a year.

While Energy Minister Simon Watts said bold and urgent change was needed to curb power prices, head of advocacy Alan McDonald from the Employers and Manufacturers Association said the announcement was not that.

"No, no it's not bold... the recommendations that were in that report, many of them were never going to fly. Putting something out for procurement and tinkering around the edges to some degree that's not bold."

He added: "Renewed interest in a liquified natural gas import terminal will provide some relief, if it gets off the ground, but that requires infrastructure investment in a new import terminal and the landed gas will likely be nearly twice the price of what it is now.

"However, possibly providing some government investment or incentives to the existing generators, to provide thermal backing generation investment (most likely diesel and coal in the shorter term), may help underpin and back greater supply of renewables such as wind and solar."

Govt has 'chosen to tinker at edges'

Political parties have also come out against the government's reforms.

Labour said they would do nothing to tackle consumers' "soaring power bills" or support businesses stymied by energy costs.

"New Zealanders are being let down. Today's announcement is a weak, short-sighted response that fails to confront the reality of our broken energy system," energy spokesperson Megan Woods said.

"Instead of delivering real solutions to lower power bills, the government has chosen to tinker at the edges and protect the status quo. The coalition failed and couldn't find a set of measures they could agree on so New Zealand households and businesses are going to be saddled with high energy prices for longer."

The government should have taken practical steps such as installing solar panels in schools and partnered with businesses to move to cheaper energy sources, Woods said.

It had also failed to move on one of the sector's biggest challenges, storing energy for dry years.

The Green Party said the government's solutions to problems in the energy market were a disaster.

Energy spokesperson Scott Willis said the solutions offered fell far short of what was needed.

"There is nothing in here that says bold, there is nothing in here that says ambition. There is everything in here that says let's continue with a fossil-fuelled future. It's a disaster really."

Co-leader Marama Davidson said: "Moves to improve transparency and information requirements in the market are useful, but will not achieve the significant intervention needed. Nothing announced today is likely to stop the gentailers rorting households and businesses who will continue to be prey to predatory pricing."

She said a Greens' Member's bill would break up the gentailers as a starting point and develop "a cleaner, smarter grid".

However, ACT said the proposals were sensible.

"These changes are intended to provide confidence to market, rather than upend it like some have called for," Energy spokesperson Simon Court said.

A missed opportunity - Bridges

Auckland Business Chamber chief executive Simon Bridges who has called for bold reforms of the energy sector says that, by and large, the measures put forward are sensible.

"But the problem is not what is included in the announcement, it's what's been left out. On their own, these measures aren't enough to address the root causes of unaffordable energy prices and tenuous supply, and any benefits they deliver to energy users will be a long way off.

"Kiwi businesses and households have been crying out for bold action - today, they didn't get it."

Bridges says that, more than anything, what's missing is a willingness on the government's part to step in to address what is a broken market.

"That could take the form, for instance, of underwriting back-up energy supply (for periods when wind and solar energy can't generated) and/or by separating the generation and retail functions of the four gentailers.

"Without these sorts of measures, energy is going to continue being a handbrake on New Zealand's economic prospects into the future.

"Ultimately, this was a missed opportunity to transform the contribution that energy can make to our country, and to demonstrate the government's commitment to growth and productivity."