Latest / Early Edition with Ryan Bridge / Gavin Male: NZ Compare CEO on the problems with New Zealand's electricity business model

Transcript

Gavin Male: NZ Compare CEO on the problems with New Zealand's electricity business model · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: We've got new disclosure rules designed to show whether the
• 0:02
  Speaker 1: power companies are making excess a possive profits. Now, the
• 0:05
  Speaker 1: problem with these rules apparently they're failing. So this comes
• 0:08
  Speaker 1: from research from the Consumer Advocacy Council. They found that
• 0:11
  Speaker 1: companies do not disclose enough information around their internal transfer price.
• 0:14
  Speaker 1: Gavin mail As the CEO of New Zealand Compare and
• 0:17
  Speaker 1: As with us, Gavin, morning to you.
• 0:19
  Speaker 2: Good morning mate.
• 0:20
  Speaker 1: Is this exclusively Gen Taylor's or everyone in the market.
• 0:24
  Speaker 2: Well, I think it's it's mostly focused around the Gen
• 0:27
  Speaker 2: Taylor's because they are pretty much the whole market, Okay,
• 0:31
  Speaker 2: I mean, they're just an enormous part of our power consumption.
• 0:35
  Speaker 1: Is that model in and of itself, because the transferred
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  Speaker 1: price is what you're creating the power for and what
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  Speaker 1: you flip it onto your retailing arm for. Is the
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  Speaker 1: model the problem or are they just not playing ball?
• 0:45
  Speaker 1: And if they are playing ball, wouldn't make any difference
• 0:48
  Speaker 1: because we might go, look, the GAP's too big anyway.
• 0:51
  Speaker 2: Yeah, I think the model is pretty much part of
• 0:54
  Speaker 2: the problem. I mean, there was a OECD report out
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  Speaker 2: last month and pretty much that flag to that we
• 1:02
  Speaker 2: need more competition within our electricity sector, and that's from
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  Speaker 2: completely independent people who look at the whole world.
• 1:08
  Speaker 1: Is that just competition though, or is it gin Taylor?
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  Speaker 1: So in other words, if you broke up all the
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  Speaker 1: gent tailors, where that solved the problem? Or do you
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  Speaker 1: just need more people doing it?
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  Speaker 2: Well, those sort of rules have come in well twenty
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  Speaker 2: five years ago now where there was meant to be
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  Speaker 2: more competition coming into the market, which then would lead
• 1:27
  Speaker 2: to a reduction in these profits and people dominating it.
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  Speaker 2: But we're still sitting with the majority of households, so
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  Speaker 2: sort of eighty five percent of people are getting their
• 1:37
  Speaker 2: power from one of these gent tailors or their subsidiaries.
• 1:41
  Speaker 2: So until consumers start driving that competition by moving to
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  Speaker 2: some of these alternatives, yes, nothing's really going to change.
• 1:48
  Speaker 1: Ah, So let's talk about that. My understanding, correct me
• 1:52
  Speaker 1: if I'm wrong, is that there are plenty of people
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  Speaker 1: who will offer you power. You can switch. Switching isn't
• 1:57
  Speaker 1: that hard. There's plenty of competition and there's plenty of
• 2:00
  Speaker 1: information out there if you want to, and we're just
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  Speaker 1: not is that fear or not true?
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  Speaker 2: That is completely fair, Mike. I mean, we're looking at
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  Speaker 2: forty percent of households and on the same provider for
• 2:10
  Speaker 2: more than five years, and if just one percent of
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  Speaker 2: all the households switched, we'd look at seven million in
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  Speaker 2: savings a year.
• 2:21
  Speaker 1: So this is on basically, so we could do if
• 2:24
  Speaker 1: we're wanted, but we just can't be bothered.
• 2:27
  Speaker 2: Absolutely. Apathy is the biggest problem in this market because
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  Speaker 2: the competition is available, there are other companies there, there
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  Speaker 2: are other people to switch to, but people just don't
• 2:39
  Speaker 2: do it, and that's leaving three hundred and eighty five
• 2:41
  Speaker 2: bucks a year on the table for most householders exactly.
• 2:44
  Speaker 1: So if you're a Gin Taylor and if you, depending
• 2:47
  Speaker 1: on who you talk to, are creaming it at the moment,
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  Speaker 1: can you blame them because the options there for you
• 2:51
  Speaker 1: to do something about it, and if you don't want to,
• 2:53
  Speaker 1: who are they to argue with you?
• 2:56
  Speaker 2: Yeah, I mean it's a similar sort of thing that
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  Speaker 2: we have in that grocery sector. Is Yeah, it's a
• 3:01
  Speaker 2: bit of apathy. People need to get to like power
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  Speaker 2: compared dot co dot NZ and compare their bills.
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  Speaker 1: Having said that, so do we need I mean we've
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  Speaker 1: had a market study. We have a market study these
• 3:11
  Speaker 1: day assumingly into everything. It's airlines, it's power companies. Is
• 3:17
  Speaker 1: there fundamentally a problem in this country or are we
• 3:20
  Speaker 1: just simply too small? We've got five million people and
• 3:22
  Speaker 1: this is the way it is.
• 3:25
  Speaker 2: Now. I don't think it has to be that way.
• 3:27
  Speaker 2: I mean, we've seen in broadband, broadband prices have dropped
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  Speaker 2: over the years, whereas that doesn't happen in some of
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  Speaker 2: these other sectors. And that's dropped because it's become easier
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  Speaker 2: for companies to enter the barriers who entry is smaller
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  Speaker 2: and competition is more. Consumers do switch when there are
• 3:46
  Speaker 2: alternatives that are.
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  Speaker 1: Attractive, interesting. Kevin appreciate time very much. Devin Mail, Who's
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  Speaker 1: New Zealand compares CEO.
• 3:52
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• 3:55
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• 3:58
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