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Nailing the Froth
Bonus Joules shares an intoxicating vision while insulating the wall.


  Bonus Joules and the Knowledge Economy: All cartoons on this site are copyright 2001 and you are free to use them with care. 

Chapter 3 No 11 Insulated from the Truth

Blog Dave McArthur published  14 December 2005

Montreal: Kyoto negotiations and the Bush administration has been cast as the villains of the piece. Sure the White House demonstrates a blind stubbornness to confront the risk from Human-induced Climate Change.  However maybe the real villains reside in our communities. Maybe they are agencies like the NZ Consumer’s Institute…

Before I go on, I will point out that I devoted much of my life to advocating for consumers. Outfits like TransAlta and OnEnergy hated my guts for my defence of Bulk-electricity consumers’ rights. I have lost, my family, my home and my career defending consumer rights. As I have mentioned in previous blogs, for years I lived with threats that my family could be raped and our home “trashed” if I did not “keep right out of the electricity industry”. These threats were for real. 

As an aside to readers not familiar with New Zealand, the prevalence of crime in our businesses and communities has increased significantly with the Economic Reforms. This is often drug based, insidious in it infiltration and its expansion is reflected in the growth rates exhibited by key national crime statistics. There has been a doubling of our prison rate since 1980. Some people, including myself, predicted such increases in the late 1980s. We perceived is as a logical result of the restructuring of our economy to serve the interests of American-based multinational corporations. Now our crime figures more reflect US practice.  

“While the number of people in prison over the past 20 years has been steadily increasing, the last 12 months have seen a sharp increase.  There are now 164 people in prison for every 100,000 of population; double the imprisonment rate that applied in 1980. While this rate remains well below the level of imprisonment within the United States (approximately 700 per 100,000), it is now significantly higher than the rate in New Zealand’s primary international benchmark jurisdictions (see table 3 below).

The 2004 Ministry of Justice prison population forecast indicates that ongoing growth in prison numbers is likely, with a continuing increase over the next five years taking the prison population of 6,961 at 30 June 2005 to 7,800 by March 2010, an increase of 12 percent.”

And now

“More than three-quarters of OECD countries have prison population rates below 140 per 100,000 population. New Zealand’s rate of 155 places it seventh-highest in the OECD, just below Mexico

In particular I am intimately aware of how the new industrial relations regime imposed on NZ about 1993 enabled criminality to thrive while removing many rights and protections of consumers. Hence, for instance, my efforts to extend real protection to whistleblowers in all sectors and to have revoked the Electricity Reforms that so disenfranchise our people. In short, I believe it unfair to dismiss me as anti-consumer.

I publicly question the role of the New Zealand Consumers’ Institute only after my failure to communicate my concern to them over a number of years. Also this year we have seen that advent of resources such as the World Wildlife Fund’s Powerswitch and Greenpeace’s Clean Energy Guide. Sure, these have major, even fatal flaws, but they provide an indication of how anti-consumer and anti-environment the NZ Consumer Institute Powerswitch is.

29 November 2005 and for some rare reason I turn the TV1 Breakfast Show on. I need an aerial and the reception is very muzzy (misting and fuzzy).

David Russell, head of the Institute, is describing the New Zealand electricity market as “a dog’s breakfast.” He points out correctly that TransPower (the owner of our national Bulk-electricity grid) is affected by conflicting legislative requirements: any price rises must relate closely to the inflation rate and at the same time it must respond to rising demand for electricity. 

(Note: David does not specify that he is really talking about just Bulk-electricity. This is most unhelpful - there are many forms of electricity and New Zealanders will be much better positioned to develop a Knowledge Economy when our “experts” understand that and begin naming them. It’s a bit like defining apples as fruit rather than just a type of fruit. In this case the Bulk-electricity sector win out by pure mass advertising. When we think of electricity we think of only their type of fruit and David reinforces their PR message.)

He says he was talking to an economics professor last week who is by no means a “left wing person. This professor says it is time to recognise that TransPower is a natural monopoly and we should give up the State Owned Enterprise notion and remove requirements that it make a profit so it can get on with the business of providing us with transmission capacity.

The TV1 breakfast hosts thank David and say what a wealth of knowledge he is. They love the way he says “dog’s breakfast” and get him to repeat it and practice it themselves. I understand why I just cannot be bothered with buying an aerial so I can view them. I decide I need their insights like I need another hole in my head. I can my recent intent to spend $120 on an aerial and instead ring my dentist and book in to spend it on a new filling.

Now there are three areas I have some working knowledge of and where I have experienced the politics that go down: the Bulk-electricity industry, postal services and dwelling insulation. This knowledge has alerted me to a pattern in the commentary provided by the Consumers Institute and I have come to believe it does not serve the public interest at the widest level. 

The Institute is a rather exclusive “market driven” agency and is not accessible to many consumers. Maybe this explains why much analysis seems to focus on the trivia of the appearance of competition. The great issues of Human-induced Climate Change, the Post Cheap Oil-Gas Age, energy efficiency and the environment in general simply do not feature in an intelligent way at all. 

This failure may reflect a wider ethos in New Zealand. This last decade we have experienced the phenomena of our media focusing on Maori MPs’ “scandals” such Tuku Morgan’s $89 underpants and John Tamihere’s supposed “$195 000 golden handshake” while a few managers were gutting the privatised national rail systems of billions of dollars to the point of its collapse. In the process they destroyed many of our energy-efficiency options and set NZ up for our current billion-dollar oil bill and huge trade deficit.

Today David is consistent to form. At no point does he get to the real issues. No effort is made to debunk the modern myth that the Electricity Reforms “deregulated” the industry. Overseas readers new to this blog should know that what actually happened was draconian legislation was created in 1993 and 1998 that disenfranchised communities from being involved in the Electricity Market after some 80 years of active participation. David is correct in describing the New Zealand electricity system as a “dogs breakfast” but fails to elaborate exactly why it is a pile of regurgitated spew. 

The Reforms not only disenfranchised communities. They also removed most of the capacity for intelligence from the national electricity system. Far from competition and accountability being increased, it is decreased. The “commercial sensitivity” that the new regime demands ensures vital planning knowledge is now fragmented and obscured. In many case’s consumers cannot even access their own Bulk-electricity consumption history any more.

Worse, the Reforms require Bulk-electricity retailers to operate within strictly limited parameters of profit imperatives. It is more or less illegal for these retail companies, even the “private modelled” State Owned Enterprises (SOEs), to engage in genuine energy efficiency measures and to promote the rights of consumers to develop distributed generation initiatives. Such initiatives reduce demand for Bulk-electricity and reduce profits. The Commerce Commission and the Consumers Institute come down on them like a ton or bricks if they dare breech this narrow profit imperative.

The Consumers Institute is part of this “dog’s breakfast” –gristle, fat and sheep offal – or if you prefer – lock, stock and barrel. It spends its time comparing Bulk-electricity retailer practice as though it matters. It does not matter. Traditionally retail costs were only 7-10% of the average bill.  The real issue is that the entire Bulk-electricity system is fundamentally and fatally flawed. The system simply cannot serve the long-term interests of consumers in the Post Cheap Oil-Gas Age. It locks them onto a treadmill serving only the interest of the bankers of the Bulk-electricity sector. 

The Institute with its PowerSwitch website buys right into the false myth of competition. Actually it is more accurate to say it is bought into it. Its claims that it is an independent agency and that it is free of sponsorship are simply not true and even if the media cannot understand this, the general public can and should know. 

Its website states

When we say "independent" we mean it

We never accept free goods for testing, nor do we accept donations or sponsorship. Our magazines are completely independent and have no ties with any commercial firm or organisation.

How we're financed

Our money comes from the sale of our publications and subscriptions to Consumer and Consumer Online. We do not accept advertising in anything we publish to protect the strict impartiality of our reporting.

The truth is the Government pays “good money” to the Institute to propagate the lies and myths of “market deregulation” and  “consumers freedom of choice in the new Electricity Markets”. To quote from the PowerSwitch article on my website

The Consumer Institute has a major sponsor, despite its claims that it is “completely independent” and “does not accept advertising.” PowerSwitch does contain the following statement:

 "PowerSwitch is produced by  Consumers' Institute with assistance from the Ministry of Consumer Affairs and the Emily Carpenter Trust "

Government statements and media releases put it differently. It seems very much a Government initiative. This 2001 Media Release states:

Comparing domestic electricity prices has been made easier with Consumer PowerSwitch, a government sponsored online service ( which allows consumers to compare electricity prices and plans.

Some may have difficulty recognising that PowerSwitch is an advertisement. If so, it may be helpful to provide a brief history of the electricity industry. Throughout its history the electricity industry has been the arena of a constant battle between the bankers who control bulk-generating facilities and associated industries and communities. At stake is enormous wealth…….. 

See my website for further discussion

Worse, yes there is worse, folks. Everything about PowerSwitch works against you and your environment. Rather it works for those bankers I spoke of. NZ Consumer Institute PowerSwitch has only one bottom line: the dollar in your pocket today. PowerSwitch gives you no idea of the long-term social (economic) and environmental (economic) impact of your investment in a particular retail company. These companies have almost unequalled rights to enter your dwelling and have considerable power to determine how you design and use your dwelling. PowerSwitch takes no account of this.  

I check my own situation out on the Institute’s PowerSwitch. It strongly advises me to switch to Empower, which is Contact (positive) Energy. The page gives no indication Empower and Contact is the same company. PowerSwitch advises me I can save $168 a year which is big money on my weekly take-home pay of $NZ290 or $360 before tax. To put my pay into perspective, the average weekly income in NZ is  $738 for males and $442 for females.

There is no way I am going to take the Consumer Institutes advice.  I cannot imagine a generating- retailing (gentailer) company that less serves the long-term interests of New Zealand than Contact Energy. Almost everything about it is an anathema to me – its education programmes, its protection of customer security, its use of our Gas resources, its dismantling of our reserve generating capacity and shipping it off the US to bail California out, its impact on energy efficiency practice, you name it. The company is everything bad about the Electricity Reform legislation forced on New Zealand

In general, Contact Energy’s existence pre-empts and destroys so many excellent options that our nation once had.  And its plain sad to see Ministers of this present Labour Government wringing their hands in anguish as they attempt to explain how the negative impact of the sale of Contact Energy by the previous National administration handicaps their administration. Just why are they so helpless to amend the Electricity Reform legislation?

Powerswitch fails me on another important area too – it has no regard for my personal security. Maybe I am being selfish. It’s just that it is important to me to know that the criminal fraternity is not being given easy access to my property. The recent electricity and industrial reforms stripped most of the safeguards that protected New Zealander’s for 80 years and the new contract system is too easily a magnet for criminals now. TrustPower protects me as no other company does, even if the company recently sold the care of several thousand of its other customers down the drain when it turned them over to the care of Contact Energy. I am willing to pay for that protection.

Early this year the WWF revealed just how bad the NZ Consumers Institute is. It launched a PowerSwitch website enabling Bulk-electricity consumers in 18 countries to compare the longer-term social and environmental impact of the activities of their local retailers.

This is a significant advance on the NZ Consumers Institute site. This said, the WWF site also fails to address customer security issues. It also fails to address the fundamental issue that the current Bulk-electricity model works to suppress energy efficiency and Distributed Generation initiatives. 

Indeed symbol use on the original WWF site was a powerful advertisement for the Bulk-electricity sector.  The site has since been seriously amended, thank goodness. It was significantly cleaned up soon after I forwarded them links to my analysis of the site as an agent of PR Spin and Energy Gobbledygook. Coincidence or not, the change is welcome.

I just checked out the WWF PowerSwitch.  It is still pretty flawed and employs symbols such “power companies”  rather than “Bulk-electricity companies” and the continuing use of the symbol Powerswitch begs many questions. I certainly will not be heeding the flashing injunction “Reduce your energy consumption”. I am looking for more ways of increasing my use of energy -mainly using the wind and solar sources available in my backyard. Too often this room is 12°C or less.

Similarly the recent creation by NZ Greenpeace of the Clean Energy Guide is a significant advance on the Institute’s PowerSwitch. It promotes environmental considerations to the fore.  However. like the other Powerswitch guides, it reinforces the flawed status quo and does little to remove institutional barriers to truly smart and consumer based uses of electricity. And it is hard to know what is best “green practice”.  

For instance, it is difficult to compare all the costs of transmitting electricity a thousand miles from a hydro generator in Southland to a user in Northland with the costs of transmitting electricity across the paddock from a modern thermal plant next door. We need to promote such thinking in the wider public.

The Guide fails to remind us of the possibility of small-scale distributed generation options. For instance no comparison is given of the relative costs of a firm running a WhisperGen using local Gas for heating and electricity uses.

The simplicity and seeming clarity of Clean Energy Guide makes it quite potent. In that potency resides the great omission of small-scale distributed generation options!

And who is going to tell Greenpeace there is no such thing as clean energy? Sure, we can have clean uses of energy and dirty uses of energy but we cannot alter the nature of energy. It is neither clean nor dirty - just as it cannot be created nor destroyed. I am always saddened seeing influential agencies like Greenpeace confusing energy with the forms it takes. There is so much more to energy than the miniscule form that is human generated Bulk-electricity. It is the merest blip in the cosmic flux. Our children deserve a greater vision.  

And talking of saner uses of Gas brings me to Vector. Someone recently asked me. “How is it that you seem to be the only person I know who has activated to keep Vector Ltd in community hands?”  Well, I will be honest, I don’t feel I have done much to stop it. Sure I have written extensively as any individual to alert people to the massive transfer of control and wealth from New Zealand communities into the hands of a few overseas merchant bankers by the Vector float. However I have not tied myself to the Vector owned pole outside my house and threatened to fast unto death. 

Perhaps I don’t care enough either or am too bloody soft and lazy. I am well aware of the massive negative impact the Vector float is going to have on our children and their environment. I cannot think of any bigger decision in my lifetime and that includes the trashing of our rail system. Come to think of it I did not tie myself to the rail lines in protest at that “sale” either. 

Anyway already the rot from the Vector float is setting in deep now. For instance, it makes more sense to use our Gas reserves in our dwellings at point of use rather than burning them up in some distant electricity generator. Especially if we use it in smart technologies like the afore mentioned Whispergen. To quote myself on another forum:

“It seems to me that if  New Zealand really wants to get serious about energy efficiency then it should junk the Electricity Reforms and allow communities be their own utilities again and turn profits into energy efficiency investments directly. That's real efficiency.  Just cut the merchant bankers who dominate our Bulk-electricity system at the moment right out of the scene. They never have had and never will have the slightest interest in energy efficiency. Just look at the recent disgusting example of Brook Asset Management now they have got their hooks into Vector and how they are attempting to block Vector investing in sane uses of Gas. And the rot of Vector is going to spread exponentially at a vast cost to our country. Remember we just handed over control of the bulk of the switch boards (meter boards to those who don't think meters/ ripples are switches) of this country to them. I wonder if Prime Minister Helen Clark knows yet and if she cares??”

 In case you are interested, I read about Brook Asset Management’s position in my weekly broadsheet, the Sunday Star Times:

“Vector's largest institutional shareholder has urged the electricity and gas lines company to return money to shareholders rather than invest it in its gas networks. 
The Sunday Star-Times has obtained a letter from fund manager Brook Asset Management to Vector CEO Mark Franklin warning that Commerce Commission price controls will mean returns won't be enough to justify spending money on new infrastructure.”

And it looks like the Wellington trolley bus system that made New Zealand’s capital such an enlightened city is going to be trashed. Vector has no interest in refurbishing the substations that serve it. Groups concerned about sustainable practice are appealing to the Prime Minister. I don’t like their luck. As my correspondence with her last year reveals, she appeared determined to remain oblivious to the impact of the float of Vector last year despite being alerted to the huge social and environmental costs down the line, to mix my puns.  

Readers may recall I devoted my last blog to pointing up the severe price New Zealand is paying for our addictive use of oil. The high interest rates, excessive inflation and trade imbalances are making many of us low income people much poorer. Now even our neighbouring Australians are feeling the effects of their addiction. This is despite the fact that traditionally when they get in a financial hole they simply dig another hole in their large continent and mine their way out of most situations:

Australia consumers spend less as petrol pains 
04 November 2005
SYDNEY: Australian retail sales fell 0.3 per cent in September as record petrol prices ate into spending power

This supports my argument that our Reserve Bank Governor would be wise to start focusing on our fundamental problem – an economy based on an addictive use of oil.

Oh, and talking of the trashing of Vector as an intelligent vehicle to a Knowledge Economy reminds me: I promised last blog I would post my reflections on my first lecture in modern Economics at Victoria University. Next time and if that happens to be after Christmas I take this opportunity to wish you all a joyous and refreshing time and may your New Year come filled with many bonusjoules.

Footnote: Funny how topical the Bonus Joules cartoon is each blog, despite being published a couple of years ago now. A while ago my neighbour gave me some old Consumer Institute magazines to read. I checked their coverage of dwelling insulation. It was thoroughly depressing.

They dumped on polyester because the length supplied was a fraction shorter than stated on the packaging. Sure that is bad practice but it is a trivial factor in the lifelong value (50 plus years) of the product. The Institute ignored important factors such as the resilience of the product in New Zealand’s relatively moist conditions and the capacity of the product to be fixed to minimise slump. Such factors can save the country billions of dollars over the lifetime of our building stock. Perhaps it is indeed time to cast a more critical eye at the role of the Consumers Institute in the development of a Knowledge (Sustainable) Economy.

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