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Home / Business / Companies / Energy

Power firms get regulator to revise pricing proposal

Nicholas Jones
By Nicholas Jones
Investigative Reporter·NZ Herald·
31 Mar, 2015 04:00 PM2 mins to read

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Te Mihi, Contact Energy's geothermal power station in Wairakei.

Te Mihi, Contact Energy's geothermal power station in Wairakei.

Power companies have successfully pushed back against a move to provide people with more information about why prices go up.

The Electricity Authority - the Government's regulator - has been unhappy with the confusion and blame-game surrounding the reasons for recent price hikes.

It considered forcing retailers to report price changes in a certain way, but decided on the softer option of producing guidelines.

Carl Hansen, chief executive of the authority, told the Herald it wanted to end the blame-game between electricity retailers and lines companies about who had caused price hikes.

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Lines companies own and operate the power lines that connect homes with power from the national grid, and charge power retailers who bundle that cost in to customer bills.

"Last year around late February and early March, when the retailers announced price changes, they tended to blame the lines companies, and the lines companies tended to blame the retailer," Mr Hansen said.

Investigations showed companies had not been deliberately misleading, but often used different methods to explain price changes.

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The authority released a draft of guidelines - not for billing information, but for how companies communicate price changes.

One action was for retailers to include a breakdown of how much lines company charges contributed to price changes for each consumer group - a move that was strongly opposed by industry.

Contact Energy argued in its submission that lines company charges would be complicated and likely confuse most customers.

Mighty River Power said it had always been clear with customers that any changes in distribution and transmission charges are simply passed through to the customer.

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"The mandating of the component breakdown of the price change will achieve just that - componentisation. It will not necessarily provide customers with clarity of reasoning and it will most likely be confusing and counterproductive," it said.

Mr Hansen said the authority had now recognised that a breakdown of price changes might add considerable work and cost for companies.

As a result, it had altered the draft guidelines to merely suggest that providing such a breakdown would meet the requirement to clearly communicate price changes. The changed guidelines would go before the authority's board today, and a final version published in mid-April.

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