Judge backs penny power deal

A local council has won its battle with an electricity company to keep cheap power.

After a High Court hearing, Justice Ron Young has upheld the Gore District Council's 75-year-old penny-a-unit deed.

His decision is a blow to The Power Company, which had hoped to use the Electricity Industry Reform Act to get out of a contract that has been costing it about $250,000 a year.

The deed, signed when the former Gore Borough Council handed over its reticulation network to the Southland Electric Power Board, entitles the council to power, for municipal purposes, at 0.83c a unit.

Contact Energy bills The Power Company for council power at the commercial rate. The company pays Contact then invoices the council at the discounted rate.

Judge Young noted that, for the year to April 30, the council paid only $19,841 for power that had cost the company $258,499 to buy.

But the company received what was effectively a rebate of about $130,000 in line charges, and therefore was out of pocket by only about $110,000, he said.

Justice Young found there was no material change in circumstances from 1996 when the Court of Appeal upheld the deed.

- NZPA