Business alarm at power price rise

Last updated 05:00 01/03/2014
tony howey
CONCERN: South Canterbury Chamber of Commerce president Tony Howey is worried about the affect of a lines charge increase on businesses.

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The South Canterbury Chamber of Commerce has expressed concern about the local lines company's decision to increase its fees.

Alpine Energy is to increase its charges by an average of 14 per cent for the average household (11,400 kilowatt hours per year), or roughly $8.60 a month.

Chamber president Tony Howey said he appreciated the company needed to upgrade its infrastructure. However, he was worried the increases could become a burden on businesses.

"Any increase over inflation has to be scrutinised. Alpine delivers its profits back to the community, but there is some concern that its increase in its lines charges will affect the larger energy users in particular," Mr Howey said.

He said the cost for businesses could be even greater than for the average consumer.

"It's not exactly a cost they can absorb. South Canterbury has a reputation as an affordable place to do business; we don't want this to change," he said.

Lines and transmission charges make up about 30 per cent of customers' power bills. Meridian, Contact Energy and Mighty River Power said they would "pass on" these charges when they release their cost changes in April.

This meant the average South Canterbury consumer's bill would rise by about 4.6 per cent for each company.

Alpine Energy chairman Steve Thompson had hoped the retailers would not pass on the charges to the consumers.

"The Commerce Commission calculated Alpine has been undercharging on its regulated assets for several years," he said.

"It would be good for the retailers to acknowledge this."

Mr Thompson said Alpine had been undergoing a major capital works and upgrade programme over the last four or five years, which was continuing this year. It is bringing our infrastructure up to date. Much of it is nearly 50 years old," he said.

Mr Howey acknowledged Alpine was somewhat "hampered by circumstance". "They have to do these upgrades, and they're bound by the regulations of the Commerce Commission, but at the end of the day, it is a cost," he said.

Chamber chief executive Wendy Smith said the chamber had met the Alpine board to discuss the situation.

"There needs to be a national discussion as to whether lines and retail charges can be unbundled from each other. It would make it easier for Alpine to set their own charges subsequently," she said.

Alpine's shareholders are the Timaru (47.5 per cent), Waimate (7.5 per cent) and Mackenzie (5 per cent) district councils, as well as the South Canterbury Lines Trust (40 per cent).

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- The Timaru Herald


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