Owner says higher costs will strain business

BUSY: Mark Schmid serves pizza in the La Familia cafe in central Whangarei. PHOTO/MICHAEL CUNNINGHAM

A Northland cafe owner already paying $1200 a month on average in electricity charges is mulling over plans to get off the national grid and opt for solar energy if power prices keep rising.

Mark Schmid, who runs the La Familia cafe in central Whangarei with wife Agnes Borrmann, said an Electricity Authority proposal to bump up transmission pricing for the upper North Island would make life difficult for small to medium businesses in particular.

The authority is proposing two of the key charges in the current transmission pricing method be replaced with two new charges, which are designed to provide far better price signals.

It is also proposing a wider range of circumstances for which Transpower could discount its transmission charges to particular customers.

A key component of the authority's proposal is an "area-of-benefit" charge.

This approach allocates the cost of a transmission investment to generators, distributors and industrial consumers located in areas of the country that benefit from the investment.

A "residual" charge would cover Transpower's overhead costs and the cost of any grid assets not recovered by the area-of-benefit or other transmission charges.

If the proposal gets the green light, Northpower lines' customers in Whangarei and Kaipara will pay $36 more a year while Top Energy's Far North power users will fork out $21 more annually.

However, commercial users would pay more as they normally used more power. Mrs Borrmann said when she and her husband started the business nearly five years ago, they paid about $1000 a month on average for both power and gas but the figure was now about $1200.

High-powered ovens, making mostly pizza, and coffee machines chew up the most power in her business.

"We've been talking about putting our prices up but are holding back because our goal, right from the beginning, has been to provide good, affordable food," she said. "I'd be interested to know how much power companies are making and do they really have to increase power charges."

Nova is currently the cheapest power retailer in Whangarei and Trustpower the most expensive. In the Far North, Globug is the cheapest while Mercury is the dearest.

The authority's consultation closes on July 26, and any change to the proposal will not come into effect before April 2019.