John Small: Commerce Commission Chair on the measures aiming to drive down electricity prices

Electricity companies could face further rules if the latest measures to drive down prices don't work. 

The Electricity Authority's moving to require power companies to charge less for power during off-peak periods and pay more for solar and battery power during peak periods. 

But it hasn't stated how much lower off-peak prices actually need to be. 

Commerce Commission Chair John Small —a member of the authority's Energy Competition Task Force— told Heather du Plessis-Allan they're hoping competition will drive down off-peak prices. 

He says they want to see how things go, but the regulator will need to consider further action if things don't go as planned. 

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Episode Transcript

Speaker 1 (00:00):
There are changes coming that might bring your power bild down.
The electricity authority is forcing big power companies to offer
cheaper prices at off peak times and also pay better
prices to solely users who feed power back into the grid. Now,
this comes after a report involving the COMMUS Commission. In
the chair of the ComCom dot John Smallers.

Speaker 2 (00:16):
With US Morning John, Good morning Heather.

Speaker 1 (00:19):
I was under the impression that we pay less off peak.
How is this not the case.

Speaker 2 (00:24):
Well, the wholesale market prices are cheaper off peak, but
retail prices are different. They're determined by what retailers offer.
And what this is really doing is saying all big
retailers have to offer plans that look like this, okay.

Speaker 3 (00:39):
And how much less do they need to charge us
off peak?

Speaker 2 (00:43):
That's not specified. It's just all that specified is that
every retailer has to have a plan that varies by
peak and off peak. And that's then obviously it's not
compulsory for people to use that. People will pick those
up if they want them. But the idea is that
they have to be offered.

Speaker 1 (01:01):
But what if they do something tricky like they offer
it at two percent less or something like that.

Speaker 2 (01:08):
But the theory that is underlying this is essentially that
they'll they'll compete with each other and people will look
across them. You know. If if this doesn't work out
as planned, then obviously regulators they have to think about
what comes next. But that's the basic idea. Give them
an opportunity, make them, make them compete in this way,

(01:29):
and see how it goes.

Speaker 3 (01:30):
And how much do you anticipate people will be able
to save.

Speaker 2 (01:35):
We I don't have that modeling. The Outrist Authority has
some modeling of that, but look, it's just directionally the
right thing to do.

Speaker 3 (01:45):
I think either I would agree with that totally.

Speaker 1 (01:48):
By the way, how much are they going to pay
the solar that the people who are feeding electricity back
through their solar power?

Speaker 2 (01:53):
Again, that's not that's a that's a principal based regulation
that it has to be done. One is actually running
through the lines companies, so they're the ones who have
to put a negative price through to the retailers, which
then gets passed on. So a little bit of chain
of supply chain there. But again the idea is you

(02:15):
have to do this because it is saving you capital,
so you must you must pay for it.

Speaker 1 (02:20):
Listen on the supermarkets and the and the charges that
were laid earlier this week. Can you explain what you
guys are alleging happened between Gilmore's and the supplier?

Speaker 2 (02:32):
Uh? Yeah, I'll have yes. Sure. Look the supplier and
there's a supplier and a customer and both of them
have traded with first Us and Gilmore's. The the supplier
and the customer struck a direct deal, so it was

(02:55):
just you know, I'll sell directly to you. And and
when Gilmore's and food Stares found out about that, they
weren't very happy and they wanted the trade rooted through them,
and that's what ended up happening.

Speaker 3 (03:11):
Well, how did they manage to get what they want?

Speaker 2 (03:15):
They have ways of persuading people about these things.

Speaker 3 (03:19):
Did they threaten allegedly?

Speaker 2 (03:21):
Well? I mean, look that this will come out in court.
But the phrase produced in the media release is persuaded.

Speaker 3 (03:29):
Okay, what what? Why did you use the phrase persuaded?
I feel like there's more to.

Speaker 2 (03:33):
The story, John, Oh, there is, but it's before it is.
You know, it's a really interesting case. It's a very
important case for us because you know, it's one where
that interaction between supermarkets and suppliers is going to be ventilated.
So it's a landmark case, but it is before the courts,
and so you know, I think we'd better just let

(03:56):
those stacks inverge at that point.

Speaker 1 (03:57):
This is the allegation that has been made now by
someps for some time, right that there is a lot
of heavy in going on by the supermarkets and so
they basically have their businesses screwed. And would you say
that if this is proven, this is what we're talking about,
This is what the supplies are saying.

Speaker 2 (04:11):
This is exactly what the suppliers have been saying to
us for a long time, and we've been We've long
been concerned about it.

Speaker 3 (04:18):
And does it affect what I pay at the supermarket?

Speaker 2 (04:22):
Not this particular case, but in general it could do.

Speaker 3 (04:26):
Okay, so.

Speaker 2 (04:29):
Well, it's restriction of competition perfectly, say, if this conduct
was widespread, then it would be it would be restrictive.

Speaker 3 (04:40):
Okay, looking forward to seeing that hit the courts.

Speaker 1 (04:42):
Really appreciate your time, John, that's John Small, the chair
of the Commerce Commission.

Speaker 3 (04:46):
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