Rort by power firms alleged

21:18, Jun 02 2014

About 1700 Marlborough Sounds households could be missing out on cheaper power charges available to low users because retail companies have copied the lines company's exemption for remote areas.

Marlborough Lines is one of three lines companies with an exemption from the Government so they do not have to offer "low-user" fixed daily charges of no more than 30 cents per day to people who use less than 8000 kilowatts of power a year.

The low-user plans have a lower fixed daily charge than the standard option, but they pay more for their electricity per unit. If they go over the 8000kw, the costs are much higher.

Three retail companies - TrustPower, Contact Energy, and Meridian Energy - also had the exemptions.

Elie Bay resident Hanneke Kroon said she had been a Meridian customer until she received a letter in February saying the low-user rate would no longer be available.

It would increase her annual power bill by more than $400, an increase of about a third.


She had moved to another power company, Genesis Energy, which does not have an exemption and which was happy to take her on despite her location, she said.

However, she wanted to raise the issue in an attempt to convince Marlborough Lines not to re-apply for the exemption, arguing it split the province into three tiers of users for little purpose. There were only about 500 low users in remote areas out of 2100 potential Marlborough Lines customers, she said, arguing the cost for Marlborough Lines would be less than $200,000 a year when its profits were "substantial".

Marlborough Lines managing director Ken Forrest said the cost of supplying power to people in remote areas was greater than the rates they paid, which was why the company got an exemption from lower charges for customers in remote areas. "They're being subsidised by the people in the economic areas. The people in the uneconomic areas are already benefiting from provision of a power supply."

The company's longest line was 327 kilometres. To maintain supply to a customer at the end of that line cost a lot more, and could involve helicopter hire. It was also more at risk of being damaged by trees, which needed to be kept clear of the line.

Meridian Energy spokeswoman Michelle Brooker confirmed it had offered low user pricing for remote areas in Marlborough up until March 31 this year. The company applied for the exemption so that its pricing plans in the Marlborough Lines network were more accurately based on charges it incurred from Marlborough Lines, she said.

Fewer than 100 Meridian customers in the Marlborough Lines network are affected.

TrustPower spokesman Graeme Purchas said TrustPower applied for its exemption on the back of Marlborough Lines' exemption, and it expected to re-apply when Marlborough Lines did in October. It had just over 1500 customers affected by the exemption. Of those, it estimated only 350 would have been genuine low-user customers.

"Without a network low-use cost structure, it is unsustainable for TrustPower to offer low user retail pricing and recover the significant fixed line costs. Additionally, the cost to serve in these remote and higher capacity households is substantially higher."

Contact Energy spokeswoman Rachel Brenton said that when a lines company applied for a low user exemption, Contact tended to follow suit.

"Costs are generally higher to supply electricity to customers in more remote areas. Distribution costs are included as part of a customer's bill from their retailer and we need to make sure the amount we charge customers for this portion of their bill reflects the costs that Marlborough Lines pass through to Contact."

The Marlborough Express