Watchdog on scent of power bills

Relief could be in sight for electricity users facing more price rises on top of a 40 per cent increase in recent years.

The Commerce Commission has launched a probe into power pricing following claims of price-fixing and a lack of competition in the electricity market.

It is also looking at the right of Transpower, the owner and operator of the country's transmission grid, to increase charges for all of its industry customers by 19 per cent from April 1 next year, and about 13 per cent for each of the next five years.

This may mean a typical domestic user paying $2 more a month on electricity next year and smaller increases over the following five years, Transpower said.

Commerce Commission chairwoman Paula Rebstock said it would not allow Transpower's price rises unless satisfied that they were justified.

Transpower spokesman Chris Roberts said the company believed it could fully justify the increases.

The prices had been set in accordance with regulations Transpower had to adhere to.

"It is generally accepted that the national grid needs some serious investment and our charges will have to increase to pay for that investment," Mr Roberts said.

Electricity consultant John Noble said he believed consumers were paying about twice what they should be.

"In 2001 we had shortages and prices went up and stayed there and the same happened in 2003. It seems quite obviously a case of the companies taking advantage of the situation to raise their prices."

It is hoped the commission's investigations into pricing forces prices down, but Mr Noble said he was not going to hold his breath it would sort all of the problems out.

"My hope is [the commission] will come up with enough facts to embarrass the Government into reorganising the industry."

Electricity retailers welcomed the commission's probe.

"I suspect they won't find a lot wrong in the retail sector," said Trustpower spokesman Graeme Purches.

New Zealand's largest consumer of electricity, the Tiwai Point aluminium smelter, also welcomed the commission's plan to investigate the market.

The smelter uses 15 per cent of the country's electricity and has suffered heavily from a 45 per cent increase in power prices over the last five years.


The cost

* The average household power bill is about $900 a year.
* Consumers are paying between 30 and 40 per cent more for electricity than four years ago.