Power price rise annoys Beehive

By Jarrod Booker

The Government will not commit to stepping in to control prices as a state-owned electricity company stings its customers with a second price boost in six months.

Meridian Energy is set to increase the power bill for about 180,000 customers by an average 6.5 per cent, on top of a 6 per cent increase last September, a move described by Energy Minister Gerry Brownlee as "very, very disappointing".

It comes amid a recession and after Meridian spilled massive amounts of excess water from southern hydro lakes that could have been used to generate electricity.

Meridian insists it has already absorbed a lot of rising costs and had no choice but to pass on the cost of building up its capacity to generate electricity.

But Mr Brownlee said Meridian's justification was "pretty thin".

"This is a time when the Government is asking for a bit of restraint, asking for people to do what they can to keep the economy moving, so from that perspective there is a degree of insensitivity there that we don't appreciate."

Asked whether the Government would consider acting to limit price increases, Mr Brownlee said it had to be very careful about stepping in "with a sudden remedy for a situation of the moment".

Setting a cap on price increases put in place "an upward price path" when flexibility was needed.

There appeared to be "considerable flaws" in the electricity market, and the Government was looking at what might be necessary to improve it.

"And we will have more to say about that in the weeks ahead."

Meridian spokeswoman Claire Shaw said the company was "acutely aware that a price increase is not welcome news ... and that customers and businesses are hurting".

Energy consultant John Noble said the whole electricity market, with 60 per cent of generation owned by the Government, was set up "favouring excess profits to go to the Government".

"New Zealand's problem is that it is quite a small country, it has a very limited number of generators [and] it can't really split the generation up any more. So you can't really hope that competition is going to pull the prices down."

- NZ Herald

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