Price rises on way at Contact Energy

Some of Contact Energy's customers face a big increase in electricity and gas charges from October 1.

The round of increases, which will see the daily power connection fee rise as much as 35 per cent for some customers, is the third by Contact in 10 months.

From next week, Wellington customers will pay a connection charge of 97 cents a day for electricity, up from 71c. Power will increase two per cent, from 18.1c a kilowatt to 18.4c.

Gas customers will pay a connection fee of $1.30 a day, up from $1.15 a day, and 6.9c a kilowatt, up four per cent from 6.6c.

Wellington is the first marketplace to face the new charges, with three other regions - North Canterbury, West Auckland and the North Shore - being rolled out sequentially.

The jump in the daily connection charges means households will pay about $29 a month or $354 a year for power, regardless of whether they use any, and about $39 a month for gas or $474 a year.

Contact customers with power and gas will get a 10c a day discount on dual daily charges, but will still have to pay $793 a year in connection fees before they use any power or gas.

That increase was pretty much in line with increases around the rest of the country being introduced on a rolling basis, Contact spokesman Patrick Smellie said.

Mr Smellie told nzherald.co.nz that the impact for customers in the affected areas would be:

North Shore/West Auckland - average 7 per cent increase
Wellington - average 8 per cent increase
North Canterbury - 9 per cent increase

The company this year made a $280 million profit and has around 600,000 customers, although some users are counted twice because they are connected to both gas and electricity.

Independent energy analyst Murray Ellis said the price rise "hasn't got anything very much to do with costs, it's just an opportunity that's there".

"They know they won't lose business," he told National Radio today.

Nothing was inherently wrong with having some sort of daily fixed charge for the benefit of being connected to electricity and gas supplies, but there were no particular rules as to what that charge should be.

New Zealand did not have much real competition in the energy market now, with all the energy companies short of supply, he said.

"There's a shortage of supply compared with the volume of demand so the power companies don't feel much need to constrain their prices."

- NZPA, NZHERALD STAFF