Luke Blincoe: Electric Kiwi CEO says wholesale energy prices are why they're not accepting new customers

Electric Kiwi is shutting its doors to new customers, blaming soaring wholesale energy prices. 

The power retailer says prices have increased by nearly 50% in the past six months, and it has now reached a point where every new customer would lose it money. 

It says the big four gentailers —Mercury, Contact, Meridian and Genesis— all made over $2 billion in record profits last year. 

Electric Kiwi CEO Luke Blincoe told Mike Hosking the Electricity Authority and Commerce Commission have allowed market failure to happen under its watch.  

He says we rely on the market to deliver an essential service efficiently and that's not happening with the current distortions. 

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Episode Transcript

Speaker 1 (00:00):
Here's a sign where the power market's at electric key,
we's closing their books to new customers right and near
the electricity Well, they blame the electricity authority in the
Comments Commission for allowing what they call market failure. The
wholesale price is to blame. The chief executive, Luke Blinko
is with us on this. Look very good morning to you.

Speaker 2 (00:16):
Good morning, Mike.

Speaker 1 (00:17):
We have been here before. Will we be here again?

Speaker 2 (00:21):
Well, you'd like to think not, but it would appear,
based on the regulatory failure that has continued probably for
the last ten years at least, hard to see it
getting better without some real urgency around intervention.

Speaker 1 (00:36):
If I ring the Comments Commission right now and said
do you reckon there's market failure and power, would they
agree with you or not?

Speaker 2 (00:43):
I think they'd give you a fairly measured answer, Mike,
But I think they would have to admit that there's
there's strong indications of issues in the market.

Speaker 1 (00:51):
For sure what you need to be as a gen Taylor,
don't you.

Speaker 2 (00:54):
Well? Right now that seems to be the case, but
that's not how it should be. You rightly point out
that we rely on markets to deliver you know, efficient
outcomes for what is actually essential service. But when you've
got distortions in that market, you get in efficient outcomes.
And that's what we're seeing now with a forty eight
percent increase in wholesale energy prices in the last six months. Now,

(01:18):
we've heard inflaced good news on inflation yesterday, but things
like this won't help.

Speaker 1 (01:23):
But on the wholesale and correct me if I'm wrong.
The reason that the wholesale price goes up is because
we don't have enough rain, or we don't have enough dams,
or we don't have enough windmills, or we haven't burned
enough coal. I mean, that's what boils down to, isn't it.

Speaker 2 (01:35):
Yeah, which relates to the build of capacity. A right,
So of our capacity today, eighty five percent of it
was built before privatization. So the current incumbents and here
at eighty five percent of that capacity, the incentive to
build more is fairly muted by the strong incentive to
keep supply tight and the existence of market power to

(01:57):
allow them to do that. So you know, I don't
think it's any coincidence that once the Tea Wadal was announced,
a whole lot of preconsented developments suddenly came out of
the got dusted off, and came off the shelf. So
there's a real incentive for the generators and the ability
to use market power to keep supply tight. And that's

(02:20):
really the another of this issue.

Speaker 1 (02:21):
But Onslow was also curtailing matters, wasn't it. At the
end of the day, the government was going to be
sinking sixteen billion dollars into something. Why would you invest
in anything now that that's gone?

Speaker 2 (02:30):
They can well. I think Teaway's probably had a bigger impact.
I don't think you know, Onslow was necessarily even that
far advanced for people to be nervous, And we haven't
seen any new players really emerge at any scale since
the closure of Onslow, and in the meantime we haven't
really built anything else. So it comes back to incentives. Might.

Speaker 1 (02:54):
As much as you want to run a good business
and be successful and God bless you in doing that,
aren't there enough in the market, be they gen Taylors
or not. Aren't there enough people in the market without
you for us to be broadly as consumers happy enough.
I mean, yes, it's expensive, and yes we'd like to
pay less and all that stuff, but it's not like
the market short of actual people who can supply mepower.

Speaker 2 (03:14):
Well, what it comes down to, MIC is the long
term is the short term trade off. The role of
independence really is to keep good down with pressure on
consumer prices through competition. If you don't want competition, then
you don't really have a market, do you. So we
do rely on a market. So you actually do need
players like us who are actually more efficient at retailing

(03:36):
than the incumbents who cross subsidize their retail businesses which
are hopelessly inefficient. So in the long run, all you'll
end up with as massively higher prices once you lose
that that level of competition.

Speaker 1 (03:50):
I admire your pluck and I wish you well. Luke Blinko,
who's the Electric key we ceo with us this morning.

Speaker 2 (03:57):
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