Electricity prices tipped to rise steeply

18:25, Mar 31 2012
Power lines
ON THE LINE: Power prices are set to go up 10 percent, with more increases likely on the way, leaving battling consumers "sick to the stomach".

Thousands of struggling Kiwi households, already unable to pay their bills, are having their power cut off.

Power price increases from today are tipped to push bills up to 10 per cent higher, but more increases could be on the way as state-owned grid operator Transpower works on a massive network upgrade.

Retail power suppliers are also facing growing problems in maintaining their lines, leading to fears those costs will be passed on to householders.

Concerns are rising that more vulnerable families will be cut off when state-owned power companies are sold to private investors, and a social responsibility requirement is dumped.

Auckland woman Folole Muliaga died in 2007 after the power to her Manukau home was disconnected, and she was left unable to use the oxygen machine she relied on.

In the first quarter of 2007 there were around 11,500 disconnections for non-payment of bills.


After the Muliaga case, the then government wrote to all state-owned enterprises about how they implemented the social responsibility clause in the SOE Act.

A Cabinet paper at the time, discussing proposed new rules, said SOEs had corporate social responsibility obligations "that go beyond other companies".

Salvation Army welfare services head Major Pam Waugh said the attitude of power companies changed after the Muliaga case, but disconnections for non-payment had since climbed back to about 9000 in the last quarter of last year.

"In winter we see more people being cut off but we also see it around Christmas and the start of the new year, when children are going back to school and families have high costs," Waugh said.

The social responsibility clause will no longer apply under the government's legislation partially privatising state-owned energy companies, and she said that could be devastating for struggling families.

"It works well when the power company will negotiate with us. If we were to lose that we'd be devastated because it would affect the ability of our clients to pay off big power bills," Waugh said.

"We would hate to see that sort of negotiating capacity disappear because our families are going to be in a lot of trouble if that happens."

Power, alongside rent and food, were the "bare essentials" for a family.

"We don't want to go back to the brutal, it's just cut off, and then you have to work out how to get it reconnected. There are usually more charges for that.

"A company can do what it wants at the end of the day, and we would hope all the power companies would want to be socially minded," Waugh said.

SOEs Minister Tony Ryall refused to be interviewed about the concerns. But in a written statement he said successful private companies maintained "strong relationships with their stakeholders and customers" because it was "good business".

Many privately owned companies, such as Trustpower and Contact, had close involvement in community organisations, and strong customer relationships. "That's not legislated – it's driven by good business," Ryall said.

But Green Party co-leader Russel Norman said the social responsibility clause gave the government the ability to influence the behaviour of the companies "in a pretty direct way".

"Because they're such a big part of the electricity market, that in turn has an influence on their competitors in the private sector," Norman said.

"By removing that, you weaken the ability to have pressure on the companies to act in a responsible way."

"We're reducing the leverage the government has over what is critical infrastructure," Norman said, adding that when the clause was dropped "it's reasonable to think there would be a rise in disconnections".

Grey Power spokesman Miles Jackson said removing the clause was a concern to older people because various medical conditions made them more vulnerable to cold weather.

"Our people are finding it hard now to pay power bills, and they fear that once the companies get into private ownership, that will accelerate price increases."

Sunday Star Times