Power prices too high says expert

By CHRIS DANIELS

Lack of competition in the wholesale electricity market has businesses paying more than they need to for power, says energy consultant Dr Garth Harris.

Harris, director of New Zealand Tariffs and Fuel Consultants, has issued a table showing that electricity prices offered to businesses have increased dramatically since last winter and remained stubbornly high.

In contrast, figures issued by the Ministry of Economic Development last week showed that, despite industry upheaval in the past four years, electricity prices for home users had stayed relatively stable.

Harris said United States research had shown that at least five electricity wholesalers were needed for an effectively competitive market.

New Zealand had four wholesalers only, which meant business and commercial customers were forced to pay higher prices than necessary.

Prices would naturally increase when, as was happening now, demand was rising to meet the levels of electricity supply.

They would also increase in a dry year, such as last year.

The lack of wholesale competition meant price increases inflicted on business since last winter were higher than necessary and should have fallen by now.

Harris said it had been difficult at times to get a good level of competition between power companies when it came to offering attractive packages to business users.

The chief executive of Plastics New Zealand, Alistair Rowe, said a survey of 15 companies in the plastics industry revealed electricity price hikes of between 19 per cent and 90 per cent.

These companies, which collectively spent $4.5 million a year on electricity, were facing an average rise of 46.72 per cent, or an increase in their annual power bills of over $2 million.

Feature: Electricity

Energy Efficiency and Conservation Authority