Big price rises for power and gas users

Auckland's power bills are rising again, with energy network company Vector saying it will increase its prices by 5.9 per cent from May.

State-owned Mercury Energy, part of Mighty River Power, yesterday added to Vector's blow, saying it was increasing its residential gas prices by an average of 6.2 per cent, also effective from May.

Those hardest hit by the Vector price hike live in Auckland City, Manukau City and Papakura. Power bills for these consumers will rise an average of 5.9 per cent, which equates to around $3 a month.

Vector's customers in its Northern zone - which includes the North Shore, Waitakere and Rodney - will pay 1.9 per cent more. Those in Wellington will pay 1.7 per cent more.

There are 293,300 customers in Vector's Auckland area, 194,300 on its Northern network and 157,700 in Wellington.

Mercury is increasing its gas prices to 16,000 customers.

Both Mercury and Vector blame higher costs for the price rises. Mercury says wholesale gas prices are increasing, while Vector cites higher labour and maintenance costs.

To soften the blow somewhat, Vector consumers facing the biggest hike are also its owners, who get an annual dividend each year through a power bill rebate.

Vector says these consumers are still paying less in real terms than they did five years ago and the annual dividend amounts to five months of no lines charge. Prices were also being "re-balanced" between the different parts of the Vector network.

There is no shortage of money at Vector, which last week announced a 50 per cent jump in half-year profits from $29.3 million to $43.3 million.

This surge was due to cold weather leading to more energy use, while cost cutting also helped.

But 2005 is unlikely to be as rosy as the last half of 2004, as the burden of interest payments on $880 million of debt raised last year starts to bite. Coupled with recent warm weather, full-year profits are predicted to fall below the $43.3 million earned in the first six months of the financial year.