KEY POINTS:
The Cabinet has rejected holding another inquiry into power prices despite two ministers saying last week that they were concerned about Contact Energy hiking prices by 10 per cent or more and wanted an investigation.
The ministers, Lianne Dalziel (Commerce) and David Parker (Energy), said they would raise the issue at yesterday's Cabinet meeting and seek a broad inquiry.
"We will be asking Cabinet to consider whether a broader inquiry is needed into whether these price increases are evidence of a lack of competition and market power being used to ratchet up prices," the ministers said after the price rise was announced.
Yesterday, Prime Minister Helen Clark said the Cabinet discussed the Contact Energy price rises - "which we don't accept the case for at all".
But current inquiries into the electricity sector would report back by the end of the year, she said, and these would be acted upon to get more competition by next winter.
The Commerce and Electricity Commissions are considering the adequacy of competition in electricity markets.
Contact's price rises for Wellington and Dunedin customers, effective from November 1, are expected to cost the average consumer about $14 more a month.
A month ago, when the company posted a $237 million profit, Contact said an increase of at least 6 per cent was likely.
Ms Dalziel said last week that she could not see how the increases could be justified.
"The latest price increases, especially for residential consumers, follow a worrying trend of price rises in excess of general inflation, and I intend to ensure that the market is not being manipulated by retailers."
Mr Parker said Meridian Energy and Mighty River Power had also recently increased prices.
"We were told a year ago that no more significant price rises were on the way yet here is another major increase."
- NZPA
