New Zealand power bills could increase by nearly $30 a month if New Zealand's gas price becomes linked to international prices, an energy analyst says.
Domestic Energy Users Network analyst Molly Melhuish calculated the $27 price rise based on an average household power bill and a 4c per kilowatt/hour increase in the domestic electricity price.
New Zealand currently produces enough gas for the domestic market and the price is lower than the international one.
If Liquefied Natural Gas (LNG) had to be imported in the future due to a domestic shortage, experts expect the price would increase well before the installation of an LNG plant.
Current estimates indicate construction of the plant would begin in 2017.
Ms Melhuish said consumers would expect prices to start rising then but power companies wanted to increase them now.
She said government action was needed to prevent price rises for New Zealanders already struggling with their power bills.
The Government could choose to follow Western Australia and other countries which had reserved gas for local use so that prices were not strictly linked to international levels, Ms Melhuish told NZPA.
New Zealand was in a gas "flush" now and could reserve some for domestic purposes.
If more gas is found than needed for the New Zealand market it will be exported for higher prices, but if less is found LNG will have to be imported.
Either way, domestic prices would increase unless some local gas was reserved for domestic use, Ms Melhuish said.
She said the situation was the same for cheese and milk - prices "skyrocketed through the ceiling" when the market was opened up to international prices.
New Zealand consumers would be struggling to pay for the price increases while power companies pocketed increased profit.
Ms Melhuish said companies would have to pay more for the LNG gas but those using wind and hydro power generation would also increase their prices while their costs remained stable.
A spokesman for Energy Minister Gerry Brownlee said the Government had previously stated it was concerned about power prices both because of the burden on the consumer and Reserve Bank Governor Alan Bollard's concerns about price rises.
He said power prices had risen 72 percent in the last nine-and-a-half years while inflation had only risen 28 percent in the same time which "seems disproportionate".
There are a number of factors that influence power prices.
The Government has begun a ministerial review which will look at the electricity industry - including prices. Several other reports have also been prepared.
While the Government cannot regulate price, it had expressed concern at the rate of increase, the spokesman said.
"There are many factors, many complications and many variables (in the setting of prices)."
