Power bills rise despite apparent competition

By JOSIE CLARKE consumer reporter

The average New Zealand household's power bill has increased throughout the first 20 months of competition between electricity companies.

Figures compiled by the Ministry of Economic Development show that domestic power bills are 3 per cent more expensive since competition between electricity retailers began on April 1 1998.

If all consumers had switched to the cheapest supplier in their area, bills would have dropped by 4 per cent.

But 85 per cent of the 1.7 million electricity customers have opted not to switch retailers amid stories of poor service, lengthy delays, disconnections and bills that are either wrong or non-existent.

The Consumers' Institute says residential customers have yet to see the benefits of the industry's restructuring, and believes the Government should step in if the shambolic reforms are not sorted out within three months.

Chief executive David Russell agreed that prices had continued to go up despite the purpose of the reform being to sharpen prices for all electricity consumers.

He has given electricity retailers a three-month deadline to fix their systems before requesting that the Government get involved.

"If the situation is not sorted out in three months, then the companies will have demonstrated they are incapable of delivering the promise that was made, and the Government must step in and do something on behalf of the residential consumer."

He said his organisation would not hold back in bringing considerable pressure on behalf of New Zealand consumers to the Government to do something about it.

The consensus from the hundreds of readers who have inundated the Herald with complaints is that any savings made by switching retailers have not been worth the trouble.

A Herald investigation into the power industry has found that the sudden change to a free market was too much, too quick.

Our survey of 11 retailers found that out of an average $100 power bill, $22 goes to retailers, $35 to lines companies, $13 to Transpower (the Government agency that owns and operates the national grid), and $30 to power stations that generate electricity. Bills vary depending on where the customer lives, and which lines company owns the powerlines.

* In the original version of this story we incorrectly stated that household electricity bills had increased by 3 per cent since April 1, 1999. They have, in fact, increased by 3 per cent since April 1, 1998.

Herald Online feature:
Overload - our troubled power companies

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