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Labour Wants Immediate Assurance On Power Prices

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 22 NZPA - The Labour Party today demanded an immediate assurance from the Government that electricity prices would not rise further.

Amid mounting reaction to yesterday's Commerce Commission report on the cost of power, energy spokesman Charles Chauvel said three state-owned companies controlled more than 70 percent of the generation market.

"Ministers could make it clear today that they are willing to accept a lower dividend from each of them while structural reforms are being considered," he said.

"This would enable them to avoid further price rises and competitive considerations would almost certainly mean that the two private operators -- Contact and Trustpower -- would follow suit."

The report said the big four generator-retailers -- state-owned Mighty River Power, Genesis and Meridian and listed company Contact -- didn't break the law but used their market muscle to maximise profits, hiking prices 72 percent between 2000 and 2008.

Customers were charged $4.3 billion more than they would have been in a competitive market.

Energy Minister Gerry Brownlee has warned the power companies not to raise prices this winter while the market structure was being examined by an expert group he has set up.

"Quite clearly there are flaws with the way electricity is marketed in New Zealand that lead to perverse results demonstrated in this report," he said.

Today Mr Brownlee said the companies would not be expected to pay back the $4.3 billion.

"The household sector is just on a third of all electricity use so it becomes very, very difficult to work out who actually has paid for what," he said.

Other reaction today included:

* The Domestic Energy Users Network said a follow-up investigation of retail costs and prices was urgently needed.

Energy analyst Molly Melhuish said that in 2007 the wholesale cost of electricity was just over a quarter of the 20.9 cents per unit paid on average by residential users.

"Energy poverty is a reality in New Zealand, especially in the South Island where incomes are low on average and winters are cold," the network said.

* The Sustainable Electricity Association said the report raised huge concerns about the design of the market.

"Clearly, the electricity market has failed to put the brakes on the exercise of market power by the large players," said association chairman Brendan Winitana.

"Consumers and the wider economy have paid a hefty price for that failure."

* Progressive Party leader Jim Anderton said the companies should give consumers a winter rebate.

"They are charging with a take-no-prisoners mentality," he said.

"The electricity companies' profits are at the expense of New Zealand's most economically vulnerable."

Mr Anderton said $200 would mean some households had a month of relief from winter heating costs.

"For superannuitants, beneficiaries and people who have lost their jobs in the downturn, it would make a huge difference."

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