Vector raising power prices

By CHRIS DANIELS, energy writer

New Zealand's biggest power lines company, Vector, is lifting its charges by more than 2 per cent.

Vector, owned by a publicly elected trust, is the monopoly lines company for the Auckland region and Wellington.

Sales and marketing manager Bryan Crawford said that the latest jump would be accompanied by an 11 per cent increase in charges from the national grid operator, Transpower.

He said Vector had found that it was "unable to further absorb increases in operating costs".

The combined effect is that power bills in the Vector network area are expected to increase by 4.4 per cent, which amounts to around $2 a month for an average household.

Power users in the traditional home patch of Vector: Auckland City, Manukau City and Papakura, will definitely be paying the new charges, as they have a direct contract with the lines company.

In other parts of the Vector area, such as the North Shore, Waitakere and Wellington, price increases are not assured, as it is up to the power retailers - mainly Contact and Genesis, whether to pass on the increase.

Contact recently raised prices for its North Shore customers on its Empower brand by around 15 per cent, so it may not pass on the latest Vector price rise, having already anticipated a jump in network costs.

Retailers may also not want to aggravate customers by having two price rises so close together.

The Commerce Commission last year introduced a formula to ensure that New Zealand's lines companies - almost all of which are community owned - do not abuse their monopoly positions by pushing up their prices.

Its "threshold" system allocated a formula which would allow lines companies to raise prices by an amount related to the current rate of inflation.

Seven of the lines companies, including Vector, are allowed to increase their prices by the same rate as inflation.

Yesterday's announcement of a 2.1 per cent increase in its charges indicates Vector thinks inflation for this year will be at least this high.