Electricity retailers seek connection charge probe

By Mark Reynolds

Several retail electricity companies are considering seeking Commerce Commission intervention to stop what they see as abuse of monopoly assets by some large power lines companies.

The retailers suggest the commission needs to look at whether aspects of interconnection arrangements they are being asked to sign by United Networks and Orion are anti-competitive. Between them, United and Orion own lines transmitting power to about 540,000 customers in north Auckland, Wellington, Christchurch and Tauranga.

The retail power companies - including big players like recently-privatised Contact Energy and state-owned Meridian Energy and Genesis Power - are concerned the cost of the interconnection arrangements will force them to stop supplying some customers in the United and Orion network.

The Business Herald reported last week that Auckland-based independent power retailer Empower was reconsidering plans for a new household power service while the stoush over access to the transmission lines was sorted out. Empower director Andrew Hawken said yesterday that the company was now considering whether it could continue to service business customers on those networks.

"All we want to do is trade on the networks but there are significant barriers to negotiate now," he said. Other retailers were unwilling to comment on the record while they were discussing the issue with United and Orion, but the Business Herald has been told a group of them have sought legal advice on their options.

"There are issues in the arrangements that affect companies differently. But there seem to be situations where some retailers are treated differently to others and the (Commerce) Commission could look at that," a power industry participant said.

The agreements are not being disputed by TransAlta or TrustPower. TransAlta sold its lines operations in Wellington to United in return for United purchasing its retail operations there and also bought retail customers formerly owned by Orion. TrustPower sold its Tauranga-based lines business to United.

The dispute the retailers have with United and Orion's interconnection contracts essentially concerns the degree of responsibility they have for ensuring the security of supply. The retailers want the network companies to assume the liability for any faults or loss of supply, while the network companies are only willing to assume that liability at an extra cost of about $50 a month per small customer.

There are also issues related to how easily retailers can integrate their information and call centre systems with customers in the United and Orion networks. "If you don't have a compatible system then there are enormous costs if you are forced to set that up," Mr Hawken said.

The access problems are not an issue in central and south Auckland, where lines company Vector has decided to maintain a direct relationship with the customers in its network., including a call centre for people to report faults.