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Electricity Industry Review TrustPower Release
10 Dec 2009
TrustPower is pleased the uncertainty hanging over the electricity industry for most of 2009 has now been relieved by the announcement of a raft of changes proposed by the Ministerial Review of the Electricity Market, and that the Government remains committed to competitive markets.
However, TrustPower is disappointed that the need to significantly improve the performance of the three electricity SOE’s, a fundamental structural problem facing the electricity industry and already recognised by a key Government objective, has been totally ignored in the Review.
Shuffling the SOE card deck is not a strategy reflective of a long-term sustainable vision to provide electricity consumers with a more secure electricity supply at competitive prices. It is, however, an acknowledgement that the respective SOE’s have not been commercially incentivised to proactively enter into bilateral hedge contracts to reduce their regional energy purchasing risk. It appears that in sheer frustration, the Government has had to force this upon them through legislation.
Equally disappointing is the omission of any requirement for SOE’s to swap customers to back the required compulsory hedge contracts. This will result in tens of millions of dollars of sales and marketing costs being wasted while SOE’s fight to retain customers in some markets, while other SOE’s fight to win them.
Chief Executive Keith Tempest says TrustPower does not believe that this raft of changes will encourage innovation, demand side participation, new entrant competition, better prices and options for consumers, or a more reliable electricity supply.
“TrustPower has demonstrated over years of electricity reforms and that it is well able to adjust its strategy and operations to accommodate and capitalise on Government market interventions. In accepting the inevitability of these latest changes, TrustPower is confident that it can again rise to the challenge, grasp the opportunities, and continue its long history of quality customer service, innovation, and growth.”