Power firm overcharged customers by $50m

State power company Transpower has overcharged consumers by $50 million but they will not get their money back.


The owner and operator of the national grid was likely to have earned excess profits from the 2004-05 year onward, the Commerce Commission said in a report yesterday.


The commission said that its analysis showed that Transpower breached its thresholds by $14.3 million in 2004/05 and by $35.8 million in 2005/06.


It would decide by the end of next month whether to impose controls on Transpower's prices, which would benefit consumers. Such a move was intended not to compensate overcharged consumers, but to stop a company from doing this in the future.


Controls would save consumers an estimated $36 million in the 2006-07 year, the commission said. And they would save another $31 million to $405 million, depending on which parts of Transpower's $3.4 billion investment programme went ahead.


The Dominion Post reported that Energy Minister David Parker would say only: "It's appropriate the Commerce Commission exercise its regulatory functions as it sees fit."


As a monopoly, Transpower is subject to a regulatory regime that restricts its price rises to the rate of inflation minus 1 per cent.


But in April 2004 it raised its prices by 13 per cent for most of the power companies it supplies, and this was passed on to consumers.


Last November, it flagged a 19 per cent price increase in April this year and said it needed an average 13 per cent rise in the next five years to pay for its investments in the grid.


Lobby group the Major Electricity Users Group said only the commission could stop electricity lines companies raising prices.


Transpower chief executive Ralph Craven said yesterday that the increases were justifiable. Strong economic growth had increased demand for electricity and to meet future demand Transpower would have to deliver a big investment programme to ensure security of supply.


- NZPA