Contact Energy loses customers after directors pay row

Shareholder anger at the October meeting prompted a fees hike backdown from Contact directors. Photo / Brett Phibbs

Latest figures appear to support warnings that price rises and a debacle over directors' fees would turn customers off Contact Energy.

In quarterly figures published today, Contact said it had 487,000 electricity customers at the end of March. That is down 2.4 per cent from the 499,000 at the end of December and down 5.8 per cent on the 517,000 at the end of March 2008.

Last October, sharebroking firm Forsyth Barr said a consumer backlash against rising prices and an attempt to almost double directors' fees had prompted thousands of householders to inquire about switching suppliers.

Company financial adviser Ken Lister said the negative sentiment surrounding Contact's price hike and proposed increase of directors' fees reached a "crescendo" at its annual meeting in October and he expected 5 per cent of customers to go elsewhere by the end of this year.

Politicians weighed in on Contact's plans to increase the fees. In the end the company passed a resolution to near-double the directors' fees pool to $1.5 million with a 79 per cent shareholder vote in favour.

Afterwards the company said there would be no increase in base fees at that time, while chairman Grant King said the company did not plan to use all of the $1.5 million straight away, but needed to have it available.

He hoped Contact would not lose customers , saying the company provided a tremendous offering to customers in terms of competitiveness and service.

The company's image was also hurt by the news in late September that customers in Wellington and Dunedin were to have power price rises of at least 10 per cent from last November.

Today Contact spokesman Jonathan Hill said the company was working hard on its customers.

"Obviously, it's an extremely competitive market at the moment," he said.

Contact had two new offers -- a DualEnergy discount for customers who received both electricity and gas from Contact providing savings of up to about $160 a year, and an increase in the prompt payment discount from 10 to 12 per cent for online customers.

Contact's gas customer numbers were down to 67,000 at the end of March from 70,000 at the end of December and 74,000 at March 31, 2008.

LPG customer numbers were up slightly to 55,000 from 54,400 and 52,000.

Contact's total generation for the March quarter dropped to 2236 gigawatt hours (GWh) from 2389 GWh a year earlier.

Thermal generation was down to 855 GWh from 1019 GWh, hydro edged down to 823 GWh from 828 GWh and geothermal was up to 559 GWh from 542 GWh.

Hill said the hydro generation continued to be affected by transmission constraints in the lower South Island, exacerbated by the closure of an aluminium production line at the Tiwai Point smelter.

Key to the fall in thermal generation were some plant maintenance outages.

Contact shares were down 2c to $5.58 around lunchtime, having reached a multi-year low of $5.46 last week.

- NZPA