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Power/petrol to rise with ETS out today

Contributor:
Fuseworks Media
Fuseworks Media
Nick Smith
Nick Smith

Wellington, July 1 NZPA - As the emissions trading scheme (ETS) kicks in today the price of power and petrol will start to rise.

The ETS imposes costs on greenhouse gas emitters which are going to be passed on to consumers and the Government estimates households will pay about $3 more a week or $165 a year -- 3.5c a litre for petrol and about 1.5c per kilowatt hour for electricity.

Climate Change Minister Nick Smith said that included the flow through costs of things such as increased freight costs.

"It includes the direct cost, how much is your power bill going to go up, how much is the direct cost to you as a petrol consumer but there's also an allowance there for the secondary impacts of, for instance, the bread you buy has had to use energy and be transported."

Those secondary impacts needed to be kept in context, Dr Smith said.

The average New Zealand family would be $25 a week better off as a consequence of the budget which cut income tax rates while increasing GST to 15 percent.

"The scheme will cost $3 ...we made modifications to the scheme last year so it's half the cost of the scheme of the previous government," Dr Smith told Radio New Zealand.

If big costs were imposed on companies they would go offshore, he said.

The Commerce Commission has warned businesses that they must not mislead consumers about the reasons for price increases.

Prime Minister John Key and some of his ministers have in recent days warned power companies -- some of them state-owned -- that price gouging in the face of the ETS was not acceptable.

"I'm concerned because some of the power companies are claiming that the emissions trading scheme is the reason they want to raise prices by double digits," Mr Key said.

"Well that can't possibly be the case, the estimates we've had is at most a 5 percent increase in power prices, and in the majority of cases it will be less than that."

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