Selling stations not seen to reduce power prices

The Waitaki Power Trust has joined growing criticism over the Government's plan to force Meridian Energy Ltd to sell its Tekapo power stations on the Waitaki River system to competitor Genesis Energy Ltd.

The consumer-elected trust, which owns the North Otago electricity lines company Network Waitaki, yesterday disputed the forced sale of Tekapo A and B would lead to more competition in the electricity market.

"It's disturbing to see Meridian's predictions that will increase the cost of electricity for South Island consumers, particularly domestic users - the cost of electricity already is pressuring some families," the trust's chairwoman, Helen Brookes, said yesterday.

Anything that unnecessarily increased the cost of electricity for domestic consumers was not acceptable, she said.

Competition in the retail electricity market was not going to work in the way it was intended and the most effective way to peg back the rate of price rises was some form of Government involvement, Dr Brookes said.

"Three of the five electricity generators and retailers in New Zealand are state-owned enterprises," she said.

She suggested the Government could use those to control electricity prices and force the others to follow.

"If the Government directed the [state-owned enterprises'] boards that any price increases had to be approved by the Government or Minister of Energy, that would encourage the independent generators and retailers to peg back their increases," she said.

Requiring Government approval for domestic electricity prices increases was not new: it had been done in New Zealand in the past and was done at present in Australia.

"Rather than trying to increase competition by causing all sorts of complications by selling Tekapo A and B, it would be more certain if price increases had to be approved by the Government," she said.

The trust did not believe competition in the retail market would be effective unless all electricity companies announced price increases at the same time.

"Otherwise, it is like petrol prices: one company leads with an increase and the others follow," she said.

While consumers had options in terms of retailers, in effect it was a hassle to change suppliers, she said.

Many domestic consumers used direct debits from bank accounts to pay electricity accounts.

Changing frequently from one retailer to another involved changing direct debits, which was inconvenient and an extra cost for the small amount of annual savings, she said.

david.bruce@odt.co.nz

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