Contact customers face power price hike

21:53, Feb 27 2013

Thousands of Southland Contact Energy customers are being hit with another electricity price hike and other power companies may follow.

Contact sent customers a letter, informing them of the price rises, this week.

Contact Energy communications manager Shaun Jones said electricity prices for Southland residential and small to medium enterprises (SME) would increase by an average of 5 per cent from April 1 .

The latest hike comes after Contact Energy, which has almost 20,000 customers in Southland, hit residential customers with a 10 per cent increase and businesses with an 8 per cent increase last year.

Mr Jones said the company recognised price rises caused concern. Contact regularly reviewed prices to ensure it continued to sustain and grow its business, he said.

It had to recover increasing network costs and balance running a profitable business with providing a fair, reliable and competitive service to customers.


A range of factors contributed towards the retail price Contact charged for electricity, with 30-40 per cent relating to network costs from other companies, he said.

Wholesale electricity market prices fell in recent months because of high lake levels in the South Island but had started to rise again.

Mr Jones said the retail tariff residential customers paid protected them against any fluctuating variable wholesale price, providing a stable basis for their bill each month but the wholesale electricity price in New Zealand fluctuated, which meant sometimes the wholesale rates were lower than residential rates.

"It also means that if something happens on the market that impacts supply, the wholesale price can, and does, rise dramatically, in some cases to many hundreds of dollars where it can stay for some time," he said.

Genesis Energy spokesman Richard Gordon said the company may review Southland prices later this year.

Any increase was driven largely by increases in fixed and variable network (lines) charges, he said.

Residential prices consisted of long-term energy costs, recovery of lines charges, the cost to run the business and a modest margin, he said.

Wholesale electricity prices were volatile - prices fell during summer but in the past week or so had begun to rise again, he said.

TrustPower spokesman Graeme Purches said there would be some price increases in other regions, but none in Southland or Invercargill.

"Customers we are acquiring as part of our current campaign have their prices locked in for some time. We may review prices for existing customers later in the year, but there are no plans to do that in the near future," he said.

Meridian Energy spokeswoman Claire Shaw said network charges for Meridian residential and business customers in most network areas would increase from April 10. This was because most network companies in New Zealand, which charged for the services they and Transpower provided, were changing, she said.

The Southland Times