September 04, 2009

Commerce Commission Chair Slams Consumers

Aha! So now we get to the heart of the matter.

Commerce Commission Chair, Dr. Mahendra Reddy blasts consumers by asserting that consultations in relation to the FEA tariff hikes DID NOT require consultations.

Reddy stated that:
"We don’t want to spend thousands of dollars when we know what the outcome would be of awarding the tariff increase, we were clear in our mind because we have done our home work, we cant sell electricity at a price which is low then the unit cost, no business would want to sell their product lower then the market unit cost."

He's essentially saying that there was a pre-determined idea that the tariffs should increase regardless of what consumer's think, because he is more worried about FEA's ability to make and sell electricity, as well as make a profit.

This economist needs to touch base with his enabling legislation which broadly lays down the role of the Commerce Commission as follows:
9. The Commission has the following objectives in relation to regulated industries and access regimes-

(a) to promote effective competition in the interests of consumers;

(b) to facilitate an approximate balance between efficiency and environmental and social considerations;

(c) to ensure non-discriminatory access to monopoly and near monopoly infrastructure or services.

It isn't Reddy's job to worry about FEA's monopolistic ability to provide electricity and make a profit. That is FEA's problem. Reddy's job is to ensure that consumers don't pay for bad investment decisions which is essentially what is happening here.

No comments: