KEY POINTS:
Prime Minister John Key does not expect Genesis will back down on its planned power price increases.
But he has made his displeasure clear and called on the company to reconsider.
Energy Minister Gerry Brownlee called Genesis bosses to a meeting last week to try talk them out of the move.
Genesis Energy is increasing power prices in Auckland by about 9 per cent from mid-January after recently raising prices in Wellington.
Mr Key said Mr Brownlee made it clear that the Government was disappointed.
"But Genesis have gone on to make that announcement so I am not anticipating that they'll change their position," Mr Key told reporters at his post-Cabinet press conference.
The news comes a few days after Reserve Bank Governor Alan Bollard said price restraint was needed to help the economy recover. He said he hoped the electricity industry "does not take advantage of its market position and keep increasing rates".
Mr Key said Genesis' decision following Dr Bollard's comments was disappointing.
"But I think it speaks to a wider issue that there are supply side issues of new generation that are a reflection on poor government policy by the last government."
He believed Genesis based its case on anticipation of lower returns and higher costs for next year.
"That is one of the issues and their argument is based around the fact that their costs will be substantially increasing in the 2009 period, in part, because of things like the thermal ban and, in part, because the inability to bring new generation on stream fast enough is driving up the price," he said.
National will introduce and pass legislation this week to overturn the previous government's ban on new thermal generation.
Mr Key said the Government was going to get on top of wider issues relating to energy and security of supply and new generation.
The Commerce Commission and Electricity Commission are working on reports on the electricity market.
Consumer New Zealand chief executive Sue Chetwin said consumers should look closely for the best electricity price they can get.
- NZPA
