Contact price rise in North Canterbury

More than 20,000 Contact Energy customers in North Canterbury will face price rises next month.

Contact announced yesterday in an advertisement in the public notices section of The Press that prices would increase 7 per cent from February 1 for customers connected to the MainPower network.

The company said it was passing on costs it had incurred from MainPower, along with higher internal costs associated with operating and building power stations.

Christchurch-based energy analyst John Noble said Contact should have absorbed the increase from MainPower, given Contact's profit last year.

Raising prices because of internal cost increases was "rubbish" and made a mockery of Energy Minister Gerry Brownlee's plan to get power companies to reduce prices.

Contact made an operating profit of $445.3 million last financial year and is forecasting a profit of $485m this year.

Contact spokesman Jonathan Hill said the average North Canterbury customer would pay another 30c a day, or less than $10 extra a month.

"It's not something that we do lightly, but at the end of the day this kind of increase is absolutely critical to enabling us to continue building the power stations the country needs."

He said 3 per cent of the increase was a cost the company had incurred from MainPower, and it was passing that cost directly on to customers.

The rest of the increase was to reflect the increased costs of operating power stations and building new ones.

Contact was spending $600m on three power projects that were all due to be commissioned this year, Hill said.

A retail electricity bill included the cost of generating electricity and building power stations, and transmission, retail and local network costs, he said.

"There's been a fairly significant increase in the network component that we are charged, which we are passing on."

He said the last time Contact put up its prices in North Canterbury was 18 months ago. "We're doing everything we can to keep our prices as low as we can."

MainPower could not be reached for comment on its network increase.

Christchurch is one of four areas covered by a Contact price freeze that is set to expire in October this year.

Meridian Energy spokesman Alan Seay said Meridian had a price freeze in place until October.

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