Act MP urges probe on price hikes

Act MP John Boscawen is calling for an inquiry into two major electricity companies after a power price hike that he says is unfair.

Both Mercury Energy and Contact Energy last week said they would raise their electricity and gas prices as a direct result of the emissions trading scheme.

The introduction of the ETS is set for July 1.

In a letter to the chairwoman of the commerce select committee, Labour's Lianne Dalziel, Mr Boscawen said: "Both companies stand to make windfall profits from the ETS."

Although the two companies were somewhat different, he said, Mercury Energy was fully owned by parent company Mighty River Power, which has substantial hydro and geothermal generation.

Therefore, there needed to be a clearer reason as to why they were putting up their prices.

He said the issue of an inquiry was "urgent".

The call comes after Climate Change Minister Nick Smith last week said the Government would clamp down on power companies who used the ETS to unfairly put their prices up.

Mr Smith told TV3 programme The Nation that he did not believe the two companies were taking unfair advantage of the ETS, but stressed that the Government would get tough with companies that did.

"If we see [them] using the ETS as an excuse to price gouge, then we reserve the right to have an inquiry and to hold them to account."