Govt move cuts electricity costs

By VERNON SMALL deputy political editor

About half of all domestic electricity customers should be able to reduce their power bills under new industry regulations, although for many the saving will be slight.

Energy Minister Pete Hodgson yesterday outlined a range of consumer-friendly measures, including cuts to high fixed charges on small users, in response to recommendations from an electricity inquiry chaired by former Finance Minister David Caygill.

The rules go further than the inquiry's report, forcing all retailers to offer a tariff by setting the fixed charge at no more than 10 per cent of the average consumer's bill. The inquiry wanted the limit to be set at 25 per cent.

The average consumer uses 8000 kilowatt hours a year and pays $1080, so under the new rules all consumers must be offered the option of a fixed charge of no more than $108 a year or $9 a month. Fixed charges now vary between $146 and $480 a year.

Officials said single-person households and superannuitants were likely to be the biggest winners. Those using close to the average amount of electricity would make only small savings.

Power companies have indicated they may increase the variable component of power bills to compensate for the lower fixed charge.

But Mr Hodgson said the Government would stop companies jacking up variable power prices to recoup all the lost income.

He said all consumers using fewer than 8000 units a year should be able save money. As a further safeguard, companies would not be allowed to refuse to supply small consumers.

The regulations were likely to come into force next year, after they were considered by Parliament's commerce select committee.

Green co-leader Jeanette Fitzsimons said her party would back the changes in principle, but would reserve its final position until it saw the fine print.

The low-tariff option meant those who saved power could be sure of lower bills, she said.

TransAlta's fixed charge in the Waitemata and Coromandel area would fall from $1.25 to 30c a day.



Other measures in the package, which Mr Hodgson said would "turn up the heat on the electricity industry," include an independent complaints system - possibly an Ombudsman - and a model consumers' contract to be drawn up by a industry body, the Electricity Governance Board.

Electricity will be added to the Consumer Guarantees Act, meaning it will be covered by rules requiring supply to be of an acceptable standard, and for problems to be fixed in a reasonable time.

Supply companies could be liable for damages if they failed to deliver service of an acceptable quality.

Retailers supplying more than 25 per cent of domestic consumers in a network area will have to offer pre-payment meters at a reasonable cost, enabling consumers to budget better.

Mr Hodgson said new laws would give the Commerce Commission power to regulate network companies, such as Vector and UnitedNetworks.

If they exploited their monopoly positions, they could be forced to cut prices.