Power price rises unlikely to ease

Elaine Cole is upset over the high price of electricity. Photo / Martin Hunter

Government warned users must pay for new electricity plants.

Power prices will continue the rapid rise revealed by the Herald on Sunday, officials have warned the Government.

In a confidential briefing, new Energy Minister Simon Bridges was told retail electricity price rises would plateau for a short time with the commissioning of new geothermal plants, providing short-term relief for comsumers.

The implied threat to close Bluff's giant Tiwai Point aluminium smelter, which devours one-eighth of all power nationwide, could also suppress power bills temporarily but that could also force the closure of older power plants such as Huntly.

The briefing said the cost of new electricity infrastructure would drive up prices again in the long run.

Co-inciding with publication of the briefing paper, Genesis, Nova, Powershop and Contact will all put their price up from next month.

Finance Minister Bill English blamed the need for investment in transmission networks for the rises.

"That investment has been made, the job is almost done, and that is going to tend to push prices up at some stage."

Last month, the Herald on Sunday revealed New Zealand's average annual power prices had surged at twice the rate of nearly every other developed country over the past 30 years. Kiwis paid more for electricity than many other OECD nations, including Australia.

Bridges ducked requests for comment at the time, but it now emerges he had been briefed two days earlier by officials from the Ministry of Business, Innovation and Employment and warned of rising prices.

The briefing showed prices often rose faster than inflation, despite declining demand for electricity that meant the country was over-supplied with affordable power.

Bridges was told affordable energy should be a top priority although officials did not explain how cheaper prices could be achieved.

"I think it's quite telling that in the briefing there is no recommendation of any actions the minister can take," Green Party energy spokesman Gareth Hughes said.

This week, Bridges told the Herald on Sunday power prices were "challenging issues" that independent regulators were working to address. "I expect that if the current trend in wholesale prices continues then retail prices will not increase as fast," Bridges said.

Kiwi prices were below the average for inflation-adjusted residential electricity prices in the OECD, he added.

- with TRN

Ever-increasing bills a switch-off

Elaine Cole ridicules the idea the number of customers switching power companies is a sign of a vibrant electricity market.

"It just shows people are running around like headless chooks trying to get a better deal from the rapacious buggers increasing their prices," she says.

Energy Minister Simon Bridges said large numbers switching retailers was evidence competition had increased.

But Cole, from Woodend, Canterbury, said New Zealanders like her were simply sick of skyrocketing bills. "They're just exponentially going up without any increase in facilities or service."

The current system was failing, she said.