Contact to hike electricity rates

BY JOHN EDENS

Fancy paying even more for your power?

Of course not – but that's the unwelcome reality for more than 12,000 residents and businesses in Invercargill and Bluff who face a 5 per cent hike in their electricity bills from March. The changes hit Contact Energy customers connected to the Electricity Invercargill network.

On March 1, for example, Contact's fixed daily charge for a residential customer on a 20kVA meter increases from $1.72 per day to $1.82 – or about $37 a year.

The equivalent charge for a business on a 50kVA meter increases from $3.65 per day to $3.87 – or about $80 a year before GST is added.

Businesses with fixed price contracts will not be affected.

Electricity Invercargill, a 100 per cent-owned subsidiary of the city council's holding company, supplies about 17,000 customers using five different retailers.

Contact Energy said generation was becoming more expensive, partly because of a 25 per cent increase in the price of natural gas and the company needed capital to fund investments of $600 million this year.

Electricity Invercargill commercial services manager Aaron Sinclair said the firm's lines charges went up by 1.6 per cent last April after Transpower – the owner of the national grid – increased its charges to the network company.

Increased demand nationwide for electricity was the main driver, he said.

Retailers pay lines companies for the use of networks and, in turn, companies such as Contact include a lines charge component in bills.

Mr Sinclair said the firm had 11,390 domestic customers in Invercargill and 598 in Bluff, each of whom is charged 5.24 c/kWh or $52.24 a day per megawatt hour, up from $51.38 for variable use.

New Eagle Hotel manager Yadran Bilish said it was a shame the power companies took advantage of the little guys. "Everything from bread to petrol has gone up in the last two years. It's not a surprise but I'm not happy about it."

Another Bluff hotelier said a monthly power bill of $500 was the norm, which equates to an increase of $300 a year.

Cunninghame flooring and paint manager Rodger Cunninghame, of Invercargill, said power companies were holding people to ransom.

Grey Power Southland president Geoff Piercy, also a director of Electricity Invercargill, said he opposed increases.

However, costs to lines companies had increased and generators expected consumers to pay for the cost of new projects, he said.

"They expect people to pay today for generation tomorrow," he said.

Contact Energy spokeswoman Louise Griffin said price increases were never popular and were not done without careful thought.

Contact's profit was $161m last year and Electricity Invercargill posted after tax gains of $6.4m.

- © Fairfax NZ News