Orion allowed to hike prices

Last updated 10:35 29/11/2013

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The Commerce Commission is allowing Christchurch electricity company Orion to raise its charges to repair of its lines network, but by less than Orion wanted.

The competition watchdog said this morning Orion could raise its charges by 8.4 per cent above the rate of inflation in April next year and by 1 per cent above inflation for the following four years.

Orion wanted 15 per cent above inflation from next year and 1.2 per cent above inflation for the following four years.

Orion's charges make up about a quarter of the consumer's electricity bill.

Orion and the 27 other lines companies in New Zealand are regulated by the commission.

It did not appear pleased with the decision, and said it would analyse the 245-page commission decision.

The company said that since the February 2011 earthquake, Orion's prices had been frozen in real terms despite its costs rising in the rebuild and its revenue being severely reduced. It said its price increases had been below inflation since 2001.

"Orion is very mindful of the impact any price increase has, especially for those on lower incomes," chief executive Rob Jamieson said.

"However, it is critical we ensure our network is resilient enough to protect our community from future disasters that may strike.

"Despite this increase, Orion and its shareholders will incur a substantial financial impact from the Canterbury earthquakes.

"Our driver is, and always has been, to manage our network in the best long-term interests of consumers and our community. This means we need to restore our network to pre-quake levels of resilience and reliability and support the rebuild of Christchurch.

"That is a responsibility we take very seriously.

"There's a lot for us to consider in the commission's decision. Our next step is to work through the detail."

The commission's decision meant Orion's pricing would still be below the New Zealand average, he said.

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- Fairfax Media

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