The short answer from the Greens is YES. Metiria has just launched the Green Party’s Mind the Gap package, the third instalment of our Green New Deal and frankly, a better way to prioritise spending in this week’s budget.
This year’s package focuses on tackling inequality. One of the eight measures proposed is a long standing Green Party policy – progressive pricing for electricity.
There are a lot of ways to do it, so the Greens used a well developed NZ model – HydroNZ – to see how it would impact on the estimated 410,000 households in New Zealand that are considered to be in energy poverty.
Energy poverty is most often defined as:
Households which would need to spend more than 10% of their income on all household energy fuels in order to achieve a satisfactory indoor heating regime are in a state of fuel poverty. (Clinch and Healy 2001) (no link, sorry)
How would it work? If you took some of our cheap renewable energy generation and sold the first block of power to every household and business at a modest price, then raised the price of the second tier of power to make up the cost difference, you would have a progressive pricing regime. There are many ways to do this, but the revenue neutral example above is the easiest to get your head around.
We estimate that a simple two tiered progressive system could lift ~70,000 households completely out of energy poverty, and significantly impact, for the better, a further 310,000 households.
That’s not too bad, eh?
So why would big business accept a slightly higher cost of electricity up front? Because having a percentage of any ongoing cost of business locked down in real terms in perpetuity is every Chief Financial Officer’s dream. This would come at a small up front cost, but allow them to avoid any cost increases on that portion in perpetuity.
There’s more detail than this short post in the Mind the Gap package, and seven more ways that a Green budget would reduce inequality. Give it a read!