Power-price blame game 'unacceptable'

MATTHEW LITTLEWOOD
Last updated 05:00 07/03/2014
andrew tombs
Andrew Tombs

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Alpine Energy welcomes a probe into power prices, even though the lines company is responsible for most of the increases in South Canterbury in the past five years.

The Electricity Authority announced yesterday it would conduct a national examination into whether electricity retailers or lines companies were most responsible for price increases as each sector blames the other. The probe would cover the past year.

Alpine Energy chief executive Andrew Tombs welcomed the investigation, saying it would provide transparency.

Figures provided to The Timaru Herald show the average South Canterbury power price increased 13.4 per cent in the past five years, three-quarters of which was because of lines charges.

The figures were provided by the Ministry for Business, Innovation and Employment (MBIE).

Mr Tombs said the figures were not surprising, as the lines firm carried out a significant amount of capital works in that time.

"South Canterbury customers still pay less for their power than the average New Zealand customer."

Electricity Authority chief executive Carl Hansen said its probe could take several months.

"It is unacceptable that different parts of the electricity industry blame each other for price increases," he said.

"We need to ensure everyone is accurately representing the real state of the market. The complaints from the sectors have been more heated this year. This is not helping the consumer, who just wants the facts," Mr Hansen said.

Mr Tombs welcomed the announcement.

"Transparency can only be a good thing and it would certainly remove any confusion or lack of clarity that exists at the moment," he said.

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.

This has led Meridian, Contact Energy and Mighty River Power to say they would "pass on" these charges when they release their cost changes in April.

However, Mr Tombs has expressed concern that some retailers' price increases were greater than the proportion attributed to lines and transmission costs, which were about 30 per cent of the customer's bill.

Mr Tombs has said it also had to pass on some of the costs of national grid operator Transpower, while the Commerce Commission determined Alpine's regulated rate of return on its assets should be about 5.8 per cent a year but, in recent years, it had been about 2.1 per cent.

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MAIN POINTS

Electricity Authority to check reasons for 2014 price increases. Retailers blame lines companies, but some lines firms are concerned retailers are passing on "extra costs". In South Canterbury, Alpine Energy is responsible for the bulk of the increase in power bills in the past five years. Alpine Energy boss says this is down to cost of its capital works projects, and Commerce Commission ruling it needed to increase its return on its asset base.

- The Timaru Herald

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