Big power users slam price plan

Transpower's price rise plans have been slammed by big power users, who say only a monopoly could get away with such behaviour.

The Commerce Commission wants to impose price control on the state-owned national grid operator, saying it has breached regulations. And the SOE planned to raise prices again; 19 per cent this year and annual increases of up to 13 per cent for the next four years, for grid upgrades.

The country's biggest electricity user, Comalco, backed price control but hoped an "administrative settlement" would avoid the commission "assuming control" of Transpower.

"Transpower's recent and intended price rises are completely unjustified," said Comalco power manager Michael Scotton in a submission on the plan.

He said it was clear the SOE intended to fund a significant amount of its capital investment programme by "extracting the money from customers first, making the investments and then charging customers for a return on the investment that the customers have funded".

"Only an uncontrolled monopoly can get away with that sort of behaviour."

It was "even more galling" that the price increases were for investments yet to be approved by the Electricity Commission.

Napier-based Pan Pac general manager (pulp) Fred Staples said the company paid $4.3 million a year in transmission costs.

"The recently announced transmission price rises effective April 1, 2006, came as a surprise," he said.

The company was "generally aware" of Transpower's proposed upgrades, but thought the new charges would comply with the CPI minus 1 per cent threshold imposed by the commission.

These thresholds apply to service quality and price. Previous price increases and planned hikes, including the one in April, breached these limits.

Commission chairwoman Paula Rebstock said Transpower was trying to pre-fund substantial investments that had yet to be approved.

A submission from forestry giant Carter Holt Harvey, which spends about $10.5 million a year on power transmission, said the price rises due for April 1 were a surprise.

Other submissions, including from the Major Energy Users Group and Transpower, are expected to be available from the commission today.

Cross-submissions are due on March 13.

SWITCHING OFF

* The Commerce Commission says it will impose price control on state-owned power grid operator Transpower.

* Transpower's plans for big price rises breach "threshold" regulations designed to stop abuse of monopoly power.

* The first submissions on the commission's plan have been made public.

* Aluminium-maker Comalco and pulp-maker Pan Pac say Transpower price rises are not justified.