July 12, 2025 • 8 mins
This morning a group of organisations have published an open letter to the Prime Minster in the Herald on Sunday.
The letter calls for the Government to make comprehensive reforms of the energy market.
Consumer NZ and the Employers and Manufactures Association are two of the organisations behind the letter.
Consumer NZ CEO Jon Duffy and EMAs Alan McDonald join Francesca Rudkin to discuss.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the Sunday Session podcast with Francesca Rudgin
from News talks'b A call.
Speaker 2 (00:13):
For urgent action to fix the broken energy sector This morning,
a group of organizations have published an open letter to
the Prime Minister in the Herald on Sunday and other
Sunday papers. The letter calls for the government to make
comprehensive reforms of the energy market. Consumer New Zealand and
the Employers and Manufacturers Association are two of the organizations
behind the letter. I am joined now by Consumer New
(00:35):
Zealand CEO John Duffy.
Speaker 3 (00:37):
Good morning, John, Good morning, and I'm.
Speaker 2 (00:40):
Also joined by EMA's Alan McDonald. Thanks so much for
being with us Allan morning.
Speaker 4 (00:44):
How's it going good?
Speaker 2 (00:45):
Thanks?
Speaker 3 (00:46):
Alan?
Speaker 2 (00:46):
Can I start with you why this letter? Why now?
Speaker 4 (00:49):
I think it just reflects the urgency that we need
to see and getting a fix to some fairly significant
structural problems, problems that have last year contributed to several
businesses closing down. And when I was talking to a
number of our members earlier this year, they were looking
at prices again over winter and if there's similar spikes
to what we've had last year, then they will also
(01:11):
contemplate making that very tough decision whether or not to
stay open.
Speaker 2 (01:14):
John, why have you all banded together to take action?
Speaker 3 (01:18):
Yeah, we are kind of strange bedfellows if you think
of what we will all do separately. But it is,
as Allen says, it's the urgency of the issue. So
just as employers and manufacturers are contemplating price increases and
considering whether they're going to have to cut back, shut
lines down, lay people off, that sort of thing, consumers,
the people of New Zealand are sitting there contemplating whether
(01:40):
they can afford to put the heater on. And I
know that's not everybody, but a significant and growing portion
of the population is having to make really tough choices
about how they manage their electricity bills. And sometimes those
choices are so tough it comes down to choosing whether
to put food on the table in a given week
ll pay the power bill.
Speaker 2 (02:00):
Allan, you mentioned significant problems. You say that the energy
market is broken. Talk me through that. How is it broken?
Speaker 4 (02:08):
Well, we've got a market where we pay manufacturers to
stop making stuff and sell electricity back so we can
keep other manufacturers and other and residential customers in electricity.
Paying people to stop making stuff and sell electricity. That
isn't an ideal world for any business at all. So
(02:28):
that's hugely problematic. And we've gone from a place of
having internationally competitive electricity pricing that actually bought major industries
here to pricing that's closing our own businesses and that's
just not good enough.
Speaker 2 (02:42):
Okay, So what do you want from the government.
Speaker 4 (02:46):
There are several things, none of them are really quick fixes.
But for example, you could establish a second market where
those businesses are are being paid to put electricity back
into the system. You could establish a market so more
businesses can contribute to that. So that's one thing that
could happen. We really do need to get on with
(03:08):
gas exploration. We need that gas or some kind of
thermal option to back what we're doing with things like
solar and wind. So that's got to happen as quickly
as possible, but that's still two or three years away.
That's if we can convince some people to come down
and drill for more gas, So that's an alternative. It
would probably help if we didn't have three regulators looking
(03:29):
at the market and we only had one, and it
would possibly help if the foot the gen tailors and
everyone's taking a crack at them, but they're only really
responding to the way the market works. But if there
could be perhaps a bit more cooperation amongst them, like
we've seen with them paying for the coal stockpile and
Huntley for example, so that we take an eended ink
(03:53):
viewpoint rather than an individual company viewpoint, this is where
I can make money. And part of that too might
be setting aside Huntly because it's the most expensive generation
in the country and when that comes on straight, that
sets the price. So maybe looking at not having hunt
we set the price, or some alternative that could be
(04:13):
something that we could look at, because we've really got
to get some stability into the price.
Speaker 2 (04:17):
And are they more short term solutions dealing with the
regulation and things.
Speaker 4 (04:22):
You could do those quicker than paths bringing on more generation.
There is a lot of generation in the pipeline. There's
about seventeen or eighteen projects in the fast track, but
you've got to get them consented, you've got to build them,
and then you also have to connect them to the grid,
and that's also a slow process. But that's something that's
being done in the new Arema as well. So there
are bits and pieces in place, we just need to
(04:44):
do them a hell of a lot faster.
Speaker 2 (04:46):
So, John, if we're looking at the ordinary consumer, what
do you want to see from the government. What are
the solutions here to ease the pressure on the ordinary consumer?
Speaker 3 (04:57):
Well, I think we need to recognize that electricities in
essential service. And you know, Ellen makes some really good
points around the structure of the market. We've set up
upper market, you know, thirty years ago that was meant
to have competition and market forces putting downward pressure on
price and causing market participants to innovate and invest in
(05:19):
new generation when prices are high. We just haven't seen that.
And we've given the market a good crack. It's been
running for thirty years and we can see the flaws
in it. So what we need to do is design
a market that actually incentivizes the generators or the gent
tailors to build generation slightly ahead of demand rather than
(05:39):
slightly behind demand, which we see at the moment, because
that's one of the reasons that prices are staying high. Similarly,
we actually need a unified strategy. And I think again
this picks up on points that Allen's made all of
the different moving parts in this system need to be
brought together in a cohesive way. And I think you know,
the number of regulators is a problem and again indicative
(06:03):
of the piecemeal way that we regulate this system, where
one hand's really not talking to the other and we
don't have central government saying all right, here's all the
different factors. Here's you know, security of supply, here's climate
change adaptation, here's affordability. Let's pull these all together in
one unified strategy and all these different moving parts you
(06:24):
start moving in you know, in sync with each other
to deliver good outcomes for both commercial clients and for consumers.
Speaker 2 (06:33):
Allen, we've had you know, the government has said that
they're undertaking review of the elec tristan market. Is that enough.
Speaker 4 (06:40):
Well, we've had a lot of reviews of a lot
of things over the many years. Be really good to
have some action that.
Speaker 2 (06:46):
Pretty much sums that up. What happens if we don't
act on these issues.
Speaker 3 (06:51):
John Well, I think you know, some of the some
of the talk around the industrialization, some of the evidence
of that actually happening, will continue, will continue to underinvest
in this super essential service for the health and wellbeing
of our people will continue to see the negative health
(07:12):
income outcomes of poorly heated houses flow through into the
health system. Costs upon costs upon costs will mount up
on society, and you know, we'll end up in a
pretty dark place, no pun intended. We need to fix this.
This is really an essential key to unlocking the economic
(07:34):
growth that the government is talking about so passionately. And look,
we all support that growth. You know, economic growth should
bring prosperity through to society. But if one of the
fundamental building blocks is holding us back, we need to
fix it.
Speaker 2 (07:48):
I was just going to say that, Ellen, You know,
we hear a lot about growth and productivity. Is this
one of the key issues that needs to be fixed
in order to move forward?
Speaker 4 (07:56):
Absolutely, the industrialization is a real problem, and it's been
a growing problem for quite some time. And I'm actually
going back out on the road to talk to our
members tomorrow and I'll talk to around two thousand of
them over the next three weeks or so, and I'm
expecting to hear a lot of businesses feeling the pain
around electricity pricing and really seriously contemplating those tough decisions
(08:18):
whether or not to carry on.
Speaker 2 (08:20):
John Duffy and Allan Donald. Thank you very much for
your time this morning. Appreciate that.
Speaker 1 (08:25):
For more from the Sunday Session with Francesca Rudkin, listen
live to News Talks It'd be from nine am Sunday,
or follow the podcast on iHeartRadio
You're listening to the Sunday Session podcast with Francesca Rudgin
from News talks'b A call.
Speaker 2 (00:13):
For urgent action to fix the broken energy sector This morning,
a group of organizations have published an open letter to
the Prime Minister in the Herald on Sunday and other
Sunday papers. The letter calls for the government to make
comprehensive reforms of the energy market. Consumer New Zealand and
the Employers and Manufacturers Association are two of the organizations
behind the letter. I am joined now by Consumer New
(00:35):
Zealand CEO John Duffy.
Speaker 3 (00:37):
Good morning, John, Good morning, and I'm.
Speaker 2 (00:40):
Also joined by EMA's Alan McDonald. Thanks so much for
being with us Allan morning.
Speaker 4 (00:44):
How's it going good?
Speaker 2 (00:45):
Thanks?
Speaker 3 (00:46):
Alan?
Speaker 2 (00:46):
Can I start with you why this letter? Why now?
Speaker 4 (00:49):
I think it just reflects the urgency that we need
to see and getting a fix to some fairly significant
structural problems, problems that have last year contributed to several
businesses closing down. And when I was talking to a
number of our members earlier this year, they were looking
at prices again over winter and if there's similar spikes
to what we've had last year, then they will also
(01:11):
contemplate making that very tough decision whether or not to
stay open.
Speaker 2 (01:14):
John, why have you all banded together to take action?
Speaker 3 (01:18):
Yeah, we are kind of strange bedfellows if you think
of what we will all do separately. But it is,
as Allen says, it's the urgency of the issue. So
just as employers and manufacturers are contemplating price increases and
considering whether they're going to have to cut back, shut
lines down, lay people off, that sort of thing, consumers,
the people of New Zealand are sitting there contemplating whether
(01:40):
they can afford to put the heater on. And I
know that's not everybody, but a significant and growing portion
of the population is having to make really tough choices
about how they manage their electricity bills. And sometimes those
choices are so tough it comes down to choosing whether
to put food on the table in a given week
ll pay the power bill.
Speaker 2 (02:00):
Allan, you mentioned significant problems. You say that the energy
market is broken. Talk me through that. How is it broken?
Speaker 4 (02:08):
Well, we've got a market where we pay manufacturers to
stop making stuff and sell electricity back so we can
keep other manufacturers and other and residential customers in electricity.
Paying people to stop making stuff and sell electricity. That
isn't an ideal world for any business at all. So
(02:28):
that's hugely problematic. And we've gone from a place of
having internationally competitive electricity pricing that actually bought major industries
here to pricing that's closing our own businesses and that's
just not good enough.
Speaker 2 (02:42):
Okay, So what do you want from the government.
Speaker 4 (02:46):
There are several things, none of them are really quick fixes.
But for example, you could establish a second market where
those businesses are are being paid to put electricity back
into the system. You could establish a market so more
businesses can contribute to that. So that's one thing that
could happen. We really do need to get on with
(03:08):
gas exploration. We need that gas or some kind of
thermal option to back what we're doing with things like
solar and wind. So that's got to happen as quickly
as possible, but that's still two or three years away.
That's if we can convince some people to come down
and drill for more gas, So that's an alternative. It
would probably help if we didn't have three regulators looking
(03:29):
at the market and we only had one, and it
would possibly help if the foot the gen tailors and
everyone's taking a crack at them, but they're only really
responding to the way the market works. But if there
could be perhaps a bit more cooperation amongst them, like
we've seen with them paying for the coal stockpile and
Huntley for example, so that we take an eended ink
(03:53):
viewpoint rather than an individual company viewpoint, this is where
I can make money. And part of that too might
be setting aside Huntly because it's the most expensive generation
in the country and when that comes on straight, that
sets the price. So maybe looking at not having hunt
we set the price, or some alternative that could be
(04:13):
something that we could look at, because we've really got
to get some stability into the price.
Speaker 2 (04:17):
And are they more short term solutions dealing with the
regulation and things.
Speaker 4 (04:22):
You could do those quicker than paths bringing on more generation.
There is a lot of generation in the pipeline. There's
about seventeen or eighteen projects in the fast track, but
you've got to get them consented, you've got to build them,
and then you also have to connect them to the grid,
and that's also a slow process. But that's something that's
being done in the new Arema as well. So there
are bits and pieces in place, we just need to
(04:44):
do them a hell of a lot faster.
Speaker 2 (04:46):
So, John, if we're looking at the ordinary consumer, what
do you want to see from the government. What are
the solutions here to ease the pressure on the ordinary consumer?
Speaker 3 (04:57):
Well, I think we need to recognize that electricities in
essential service. And you know, Ellen makes some really good
points around the structure of the market. We've set up
upper market, you know, thirty years ago that was meant
to have competition and market forces putting downward pressure on
price and causing market participants to innovate and invest in
(05:19):
new generation when prices are high. We just haven't seen that.
And we've given the market a good crack. It's been
running for thirty years and we can see the flaws
in it. So what we need to do is design
a market that actually incentivizes the generators or the gent
tailors to build generation slightly ahead of demand rather than
(05:39):
slightly behind demand, which we see at the moment, because
that's one of the reasons that prices are staying high. Similarly,
we actually need a unified strategy. And I think again
this picks up on points that Allen's made all of
the different moving parts in this system need to be
brought together in a cohesive way. And I think you know,
the number of regulators is a problem and again indicative
(06:03):
of the piecemeal way that we regulate this system, where
one hand's really not talking to the other and we
don't have central government saying all right, here's all the
different factors. Here's you know, security of supply, here's climate
change adaptation, here's affordability. Let's pull these all together in
one unified strategy and all these different moving parts you
(06:24):
start moving in you know, in sync with each other
to deliver good outcomes for both commercial clients and for consumers.
Speaker 2 (06:33):
Allen, we've had you know, the government has said that
they're undertaking review of the elec tristan market. Is that enough.
Speaker 4 (06:40):
Well, we've had a lot of reviews of a lot
of things over the many years. Be really good to
have some action that.
Speaker 2 (06:46):
Pretty much sums that up. What happens if we don't
act on these issues.
Speaker 3 (06:51):
John Well, I think you know, some of the some
of the talk around the industrialization, some of the evidence
of that actually happening, will continue, will continue to underinvest
in this super essential service for the health and wellbeing
of our people will continue to see the negative health
(07:12):
income outcomes of poorly heated houses flow through into the
health system. Costs upon costs upon costs will mount up
on society, and you know, we'll end up in a
pretty dark place, no pun intended. We need to fix this.
This is really an essential key to unlocking the economic
(07:34):
growth that the government is talking about so passionately. And look,
we all support that growth. You know, economic growth should
bring prosperity through to society. But if one of the
fundamental building blocks is holding us back, we need to
fix it.
Speaker 2 (07:48):
I was just going to say that, Ellen, You know,
we hear a lot about growth and productivity. Is this
one of the key issues that needs to be fixed
in order to move forward?
Speaker 4 (07:56):
Absolutely, the industrialization is a real problem, and it's been
a growing problem for quite some time. And I'm actually
going back out on the road to talk to our
members tomorrow and I'll talk to around two thousand of
them over the next three weeks or so, and I'm
expecting to hear a lot of businesses feeling the pain
around electricity pricing and really seriously contemplating those tough decisions
(08:18):
whether or not to carry on.
Speaker 2 (08:20):
John Duffy and Allan Donald. Thank you very much for
your time this morning. Appreciate that.
Speaker 1 (08:25):
For more from the Sunday Session with Francesca Rudkin, listen
live to News Talks It'd be from nine am Sunday,
or follow the podcast on iHeartRadio
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