Contact Energy freezes prices

Contact Energy has frozen its Christchurch and Wellington prices for the next two winters.

The NZX-listed generator and retailer announced the price freeze yesterday, guaranteeing its customers' bills would stay the same until at least October 2010.

People who signed up to special Contact deals last year would automatically shift to the frozen tariffs once those agreements lapsed.

Contact says it will absorb any increases in charges from national grid company Transpower or lines company Orion New Zealand during the 16-month period.

However, any Electricity Commission levy rises will be passed on to customers.

Contact's most recent price rise was in September last year.

Energy Minister Gerry Brownlee told The Press he did not want to become involved in "commercial endorsements" but said this was a "very positive step" for consumers.

Two weeks ago, he said it would be audacious of any power company to increase prices in the wake of the Commerce Commission investigation showing companies benefited by $4.3 billion from overcharging, mostly in dry years.

"I can only applaud them (Contact) for being so bold," Brownlee said yesterday.

"This will set a bit of a pace for all electricity retailers to consider."

State-owned Meridian Energy, which supplies power to about 80 per cent of Christchurch's homes and businesses, said it had no intention of introducing a price freeze.

"We put our prices up in March and we have no immediate plans to increase them," spokeswoman Claire Shaw said.

Contact spokesman Jonathan Hill said the idea had not been motivated by Brownlee's comments.

The company had been working on it for several weeks.

Age Concern chief executive Stephen Phillips welcomed the move.

"Even with fixed prices, it will be difficult for some people on fixed incomes to stay warm in winter. But I think this is good news and should be applauded."

Wellington domestic electricity users' advocate Molly Melhuish said Contact had had a "huge image problem". The freeze was a good commercial move.

"From the domestic users' point of view, you can only welcome a two-year price freeze. Good on them. Let's see the other companies follow."

Christchurch electricity consultant John Noble said it was a shrewd commercial move that had several possible motivations.

"Maybe they are second-guessing Brownlee introducing a freeze anyway?

"Contact is pretty well-off because it has thermal power stations," Noble said.

"I guess you could argue that Contact is in a stronger position than Meridian with excess generation and this thermal back-up, and they can afford to do this.

"Meridian probably can't because it suffers in dry years."

- © Fairfax NZ News