Big power users back X-factor price control

By RICHARD BRADDELL

WELLINGTON - Electricity lines companies should face immediate price control, but these should be gradually relaxed once they set up acceptable pricing systems, say industrial electricity users.

Terrence Currie of the Major Electricity Users Group said the status quo was unacceptable, and price controls which forced lines companies to reduce prices by the rise in the consumers price index minus a factor known as "X" should be introduced.

Mr Currie told the Government's electricity inquiry that present methods for setting lines company asset values - which in turn provide the framework for acceptable price levels - needed to be reassessed.

His group supported the CPI-X formula proposed by the Consumers' Institute among others, and agreed with the institute that X should be set as high as 20 per cent.

But it did not believe the arrangement should go on forever.

Instead, in perhaps two years, the lines companies should have the chance to stop using the CPI-X formula once they developed a "stakeholders' charter" that gave interest groups - including customers, retailers and generators - in their area a say in the pricing process.

Mr Currie said the Major Electricity Users Group was still considering the principles of a stakeholders' charter, and it had no firm view yet on how this would work.

Asked by panel chairman David Caygill why the chance to set up a charter should not be introduced immediately, Mr Currie said the lines companies first had to "experience jail" as an incentive to get them to behave under a less controlled system.

"It's unlikely that a group of stakeholders could get the lines companies to agree to CPI minus say 10," he said.