Power price hikes loom from April

18:16, Feb 27 2013

Contact Energy's South Canterbury customers are likely to face a sharp increase in their power bills, and other power suppliers are also signalling price rises.

Contact spokesman Shaun Jones said the rise was due to several factors, including nationwide increases in network charges, and the winding up of its five-year, $2 billion capital works programme.

From April 1, the average power bill will rise 7.7 per cent for residential customers, and 8.1 per cent for small-to-medium businesses.

"No-one likes having to pay more in their power bill, but we have to wear a lot of the costs passed on to us," Mr Jones said.

"Our capital works programmes will also give us security of supply for years to come."

Contact Energy, an NZX-listed company, reported an after-tax profit of $88 million for the six months ended December 2012.


It recently announced that up to 100 staff could lose their jobs, as it attempts to restructure its business. The company is also finishing several major capital works programmes, including the 159MW Te Mihi geothermal plant at Taupo.

Contact Energy has a 59 per cent share of the South Canterbury retail market, with an estimated 18,400 customers.

The price rise means a family on the economy plan, with an annual usage of 8000 kilowatt hours of electricity, could pay $120 more per year.

Most of its competitors are waiting for lines company Alpine Energy to set its charges. These usually account for up to 30 per cent of the customer's bill.

However, state-owned generator Meridian Energy said its prices for South Canterbury customers were likely to increase 2 per cent from April.

Mercury Energy general manager James Munro said prices for its residential customers in Timaru would increase by an average 4.2 per cent from April 1, or roughly $7.30 per month.

"We have managed to keep our energy increase in Timaru down, but the overall impact on customers' bills is more due to the lines and transmission increase," he said.

Mercury Energy is a retail division of state-owned enterprise Mighty River Power, which recorded a net profit of $75m for the six months ended December 2012.

TrustPower and Genesis are yet to confirm their increases for the coming year.

Last year, Genesis' prices for South Canterbury customers increased 13 per cent, but spokesman Richard Gordon said this was after nearly three years of no price increase.

Rebecca Wilson, a spokeswoman for national grid operator Transpower, said transmission costs usually accounted for 7 per cent to 10 per cent of a customer's bill and this was unlikely to change.

The Timaru Herald