MainPower shows big boys the way to save

By Mark Reynolds

A small South Island electricity network company has put the heat on larger power lines businesses by restructuring its operations and passing the cost savings on to its customers.

Just last year Rangiora-based MainPower's 25,000 customers were paying some of the highest regional electricity transmission costs in the country. But changes introduced by the company over the past 12 months mean line costs for farmers and small business customers in its North Canterbury network will drop by $140-$400 a year.

Household line costs will come down by a more modest $25 a year, but that comes at a time when customers connected to other power networks are threatened with price increases.

MainPower managing director Allan Berge said the company had re-assessed its whole operations last year, following the government's announcement of changes to electricity laws.

"As a result of that I think we re-invented our operation. The revised operation is now in a much more appropriate shape to run a network operation for the electricity industry," he said.

In fact, Mr Berge believes MainPower is now so efficient that it is well placed to manage network operations for other companies.

"We are in discussions with some companies to do that, but I wouldn't like to name them at this stage," he said.

MainPower, like all electricity companies, was caught by last year's Electricity Law Reform Act that effectively forced electricity companies to sell either their electricity retail and generation operations or their network businesses.

Like most community-owned power companies, MainPower chose to keep the lines business.

It sold its retail business to Contact Energy, in what was one of the first such deals to take place.

"We not only did that but we also took a good look at what we had left. We looked at the rate of return we were getting on our assets and revised the whole methodology for setting our prices.

"We also divested a lot of operations and contracted out most of our service operations," he said.