Power prices to rise again

Power prices are set to rise across the region, just before the onset of winter.

Transmission charges are going up, so the region's distribution companies, Network Tasman and Nelson Electricity, will increase their line charges from April 1, with retailers in turn passing that on in power bills.

Nelson Electricity is increasing its line charges by 8.8 per cent, which works out at just over $1 more each week on an average customer's bill. Network Tasman line charges will rise 3 per cent, adding around $1.50 a month or $18 a year to an average domestic power bill.

Contact Energy will pass on these increases. It says this will mean an average 2.8 per cent price rise for about 2015 Nelson city customers. Its 17,578 Tasman district customers will face an average 1 per cent increase.

For Meridian Energy customers on the Nelson Electricity network, the increase will be 3.1 per cent in Nelson and 1.2 per cent in Tasman. It is offering a three-year fixed rate to protect against potential future price increases.

Nelson Electricity delivers electricity to 7300 homes and 1800 businesses in central Nelson. General manager Phil Goodall said that while the local network costs had only increased in line with inflation, the transmission costs from state-owned national grid operator Transpower had increased by 20 per cent.

Mr Goodall said the higher than usual transmission costs were due to additional capital investments at Transpower's Stoke substation in Marsden Valley for Nelson Electricity, and a significant increase in connection charges.

The overall effect was an increase in line charges of 8.8 per cent, or 15 cents a day, for the average domestic consumer using 8000 kilowatt hours each year. Of that, 7 per cent was due to transmission costs and 1.8 per cent was due to other costs.

A substation replacement in Haven Rd and 33,000-volt feeder back to the Stoke substation, due to start in March at a cost of $12 million, were already factored into current prices.

Network Tasman chief executive Wayne Mackey said the transmission charges it paid to Transpower would increase by 6 per cent from April 1, following a 30 per cent increase last year. Network Tasman was also increasing its own local network charges by an average of 3 per cent.

"Network Tasman has very limited control over rising transmission costs, and the company is also grappling with higher maintenance and development costs for the local network," he said.

Mr Mackey noted that Transpower had almost completed a $2 billion national grid upgrade, and the grid was now more secure and robust than it had been for some time. The upgrade had been the key factor behind rising transmission costs.

He said Network Tasman had held its own distribution charges well below Commerce Commission pricing limits, and had kept its annual price movements close to the annual rate of inflation for over a decade. Recent official data showed that Network Tasman's line charges were among the lowest in the country, and currently accounted for about one-third of the average domestic power bill.

Transpower said its increases were due to several large projects going live, and were critical to ensuring New Zealand had a reliable transmission grid.

"We are coming to the end, however, of our major build programme, and following the price increase this year, we expect transmission prices to be flat to falling in real terms - that is, that any increases going forward will be below inflation."

It said its prices in real terms were returning to about the level they were at when Transpower was formed in 1994.

Transmission charges remained a small component of a consumer's power bill - around 9 per cent, Transpower said.

"We expect that transmission [charges] will not exceed 10 per cent of the end consumer's bill, even after the current major investment period has been completed."