Contact Energy customers face price hike

01:58, Feb 25 2014

Contact Energy customers are facing power-price rises averaging 2.6 per cent from April 1, but the company is blaming local lines companies for the jump.

The increased charges relate only to the network and transmission part of a residential or small business's electricity bill. That accounts for about 40 per cent of the total electricity bill, Contact said.

The increased charges do not include any change to the energy or service-related costs which Contact has committed to holding unchanged until at least April 2015.

Contact said it had started to notify customers of the planned increase in electricity costs.

Each of the 29 local lines companies set their own tariffs and charges.

"While the average bill increase as a result of the changes is 2.6 per cent, there are some regions where the price changes are much higher," Contact said.

Contact chief executive Dennis Barnes said last week that the ability for electricity retailers to come up with new products and offerings for customers was stifled by the complexity of the existing lines companies' pricing structures.

"While we support lines companies earning an adequate return on their assets to ensure the long-term security and reliability of New Zealand's electricity network, the inherent complexity of having so many different tariffs and cost structures in such a small market is not providing the right environment for the market to efficiently innovate new retail products," Barnes said.

More than half Contact Energy's households get a 22 per cent discount on their electricity bills and the power company claims to have the cheapest rates in most of the regions where it operates.

Barnes said it was possible that household power prices could come down in future, and that Contact prices had effectively been falling for customers.

"But will prices go down materially further? I don't believe so," Barnes said last week, adding that neither would they rise in the next few years.

In the half year to December, some 51 per cent of Contact's household customers got the discount, up 4.5 percentage points on a year ago. That translated into savings worth about $300 a year, Contact said.

The discounted rates made Contact the cheapest power company in about 21 of 29 regions where it operated.


Fairfax Media