Mighty River to freeze power prices for 15 months

Photo / NZ Herald

MightyRiverPower, the first state-owned power company to be partially privatised by the government this year, plans to keep the price it charges for electricity on hold until at least April 2015, but can't guarantee transmission and distribution prices won't rise.

The energy component of a power bill is between 50 and 60 percent of the total and the Auckland-based company says it won't move that element of its prices for gas or electricity residential customers as it waits for looming regulatory changes on lines companies and grid operator Transpower.

It will then assess the impact of any tweaks, it said in a statement. The regulation is expected to be set in the coming two months. A long awaited High Court decision on a merits review of the Commerce Commission's approach to regulated pricing for electricity and gas distribution is expected today.

"We are now confirming that for our customers there will be no increase in our energy prices for a further 15 months,'' chief executive Doug Heffernan said. "However, there will likely be changes in customer pricing from April 1 due to variables over which we have no control that we pass through on our bills - such as transmission and distribution charges and any increases in metering costs due to regulatory requirements.''

MRP's move comes at a time when electricity policy becomes increasingly politicised, with Opposition parties promising to overhaul the industry structure by introducing a central wholesale buying agency as a means to keep retail prices low.

"Our decision to hold energy prices is the result of a healthy, well-functioning electricity market that has, by global measures, delivered positive outcomes for both customers and the country, enabled by the multi-billion dollar investment in renewable generation capacity by a number of competing generators over the last few years,'' Heffernan said.

Government figures show electricity consumer prices rose at an annual pace of 3.6 percent in the September quarter, and gas prices increased 0.7 percent. That compares a 1.4 percent annual increase in the overall consumer price index.

Last month MRP affirmed its forecast for annual earnings growth of 27 percent to $498 million in the year ending June 30, 2014.

The company's shares were unchanged at $2.025 in trading yesterday, and have dropped 19 percent from the $2.50 offer price in the May float. MRP embarked on a share in October as a means to prop up the price.