Power price to jump again

Meridian Energy customers are being hit with their second power price rise in six months, an increase the Government calls "ludicrous".

From March 15, prices will rise 7 per cent for customers in Canterbury and Dunedin.

The giant state-owned power generator and retailer is lifting prices around the country by an average 6.5 per cent.

There are about 114,000 Meridian customers in Canterbury and 210,000 nationwide.

Meridian increased its prices by 6 per cent last September, with 3 per cent price rises in September 2006 and 2007. The announcement comes less than a week after Meridian stopped spilling vast amounts of excess water from overfull southern hydro lakes.

Meridian spokeswoman Claire Shaw told The Press the energy company had tried to keep the increase as low as possible. It was not an attempt to recover costs after last year's winter power shortage but reflected the long-term cost of introducing new generation, she said.

The amount the power shortage cost the state-owned enterprise would be known after its financial report to Government shareholders next month.

Energy Minister Gerry Brownlee said last night he had "expressed disappointment" to Meridian when told of the impending price increase.

"I can tell you I'm not happy about it," he said.

"Meridian needs to explain to customers why, at a time when the lakes are so full that they have to spill water over the top, and the cost of their `fuel' for generation is basically zero, they are having to put their prices up. It's ludicrous."

There were some fundamental problems with New Zealand's electricity market that were now being studied, he said.

Green Party co-leader Jeanette Fitzsimons said a 7 per cent rise only six months after the last one was "a huge increase".

"I don't think it is justified. It is way, way more than the rate of inflation. The public would expect a publicly owned company, when people are losing jobs, to look at pruning their costs. Is Meridian's lavish advertising programme necessary for a power company? Is the salary structure for their very top people appropriate? They should look at pruning spending before they expect consumers to pay more."

Shaw said Meridian customers should be notified of the rise from today.

"We are aware that it's not going to be welcome news. Anybody who can't pay their bill, or who is struggling to pay, they can contact us through our call centre and we can help."

Meridian was still the cheapest electricity retailer in Christchurch, she said.

Christchurch Age Concern chief executive Stephen Phillips said 7 per cent was a "horrendous" increase. "We are worried about the impact of power price increases on older people on fixed incomes and also those with less income available from the decrease in interest rates from investments."

Labour Party energy spokesman Charles Chauvel said it was clear the electricity market was not delivering the right results for consumers or power companies.

MERIDIAN FACTS

Meridian Energy pay and profits:

PAY

Meridian chief executive Tim Lusk's salary band lies between $1.4 million and $1.41 million.

204 Meridian employees earn $100,000 or more a year and 28 earn above $200,000 annually.

RECENT PROFITS

2007-08: $128.6 million.

2006-07: $199.8 million.

2005-06: $856.8 million (includes gain from sale of Southern Hydro in Australia).

2004-05: $218.2 million.

2003-04: $132.9 million.

Profit figures are after-tax profits on July 1-June 30 financial years.