Power firms 'overcharged NZers $4bn'

Power generators overcharged customers more than $4 billion over six years by using market dominance, according to a Commerce Commission report due out tomorrow.

The study will find that the country's main electricity generators, state-owned Meridian Energy, Genesis and Mighty River Power and privately owned Contact Energy, effectively used their market power to maximise profits, including withholding power at peak times, The Dominion Post reported.

However, it was not expected to find their actions were illegal, so no prosecutions were likely.

Energy Minister Gerry Brownlee has commissioned his own separate review into the price of electricity, the security of supply, the electricity market and overlapping roles in the industry.

A spokesman for Mr Brownlee told NZPA the minister was unlikely to comment on the report as it was a market-sensitive and had not yet been released.

However, the commission's report could be included as part of the minister's review.

It is understood power generators will strongly reject the methodology of the commission's report.

The report implies hydro-generators were best placed to gain from playing the system, especially during dry years.

Meridian, which makes most of its power through hydro schemes, was likely to be in the forefront of opposition, but it would not comment until it had seen the report and studied it.

Power prices rose by 72 percent between 2000 and 2008 while inflation went up only 29 percent.

Stanford University energy market expert Professor Frank Wolak contributed to the report and it is understood he calculated companies had overcharged by at least $4 billion from 2001 to 2007.

That meant New Zealanders paid an average $1000 each more for power over the six years.

Generators offered higher prices in half-hourly bids to the spot market when they had "a higher unilateral ability to exercise market power".

A draft of his work was delivered to a power conference in March but later removed from the internet.