Contact gives the gas bill a New Year boost

Energy Minister Gerry Brownlee advises dissatisfied Contact Energy customers to shop around. Photo / Simon Baker

Contact Energy is ringing in the New Year by increasing its gas prices.

About 65,000 residential and business users will pay an average of 5 per cent more for gas from January 1.

Contact's move foreshadows expected rising energy bills as the effect of the emissions trading scheme is felt from the middle of next year.

The cost of the scheme has been forecast to add a further 5 per cent to bills.

Contact blames its New Year's Day increase on a 25 per cent increase in the price it pays for wholesale gas.

Its move follows an average 10 per cent increase by Mercury Energy last month.

A Contact spokesman said the huge Maui gas field had provided cheap gas for 30 years. But it was in decline, and no other similar size fields had been discovered.

"Maui gas field has traditionally provided very cheap gas, but those days are now over and gas is much more expensive."

About 41,000 customers quit Contact over the past 14 months after a series of commercial and public relations blunders, and the company has had to work hard to win them back, pledging to hold electricity prices in some areas and offering other incentives to prospective and existing customers.

Contact - majority-owned by Australia's Origin Energy - had a 50.4 per cent profit plunge to $117.5 million for the year to July.

Energy Minister Gerry Brownlee said customers should shop around.

"No doubt there will be a lot of dissatisfied Contact customers," he said.

It was important for consumers to do their homework on gas and electricity companies and work out how to get the best deal.

"Utilities suppliers will quickly realise they need to be competitive when they find themselves losing customers."

The Contact spokesman said he hoped customers would be sympathetic.

"We have explained to our customers that the price we pay for gas has increased by a quarter over 2009, and I think customers will understand the pressures that places on a business."

Mercury Energy, a subsidiary of taxpayer-owned Mighty River Power, increased gas prices last month for 40,000 customers, mainly in Auckland.

Another state-owned enterprise, Genesis Energy, says it will hold its gas prices until October at least.

Retail general manager Dean Carroll, said the company had a responsibility to be efficient as possible and to contain cost increases.

Genesis Energy has more than 108,000 gas customers in the North Island and a range of gas supply agreements. It has contracted for all natural gas from the Kupe field which came on stream last week.

Gas is used to generate about 15 per cent of New Zealand's electricity and higher gas prices will also push up power prices.