Fed-up customers look at wind, sun and diesel to beat lines charges

A tiny King Country town which depends on tourism could go off the national grid because of crippling lines charges for power.

In towns all over the region, residents, farmers and business owners are investigating self-sufficient power supply to get away from The Lines Company's "demand charge", which has increased some electricity lines bills by up to 300 per cent.

It comes as the Commerce Commission starts a Fair Trading Act investigation into The Lines Company.

The owners of four lodges in National Park, a village catering to Mt Ruapehu skiers, are meeting experts to determine what other power sources they could use.


Pipers Lodge owner Bruce Lawrence pays $30,000 a year in lines charges - $10,000 more than his power costs.

Mr Lawrence said the group would investigate diesel-fired generators, solar power and wind power, but they were concerned about the cost of converting as well as the burden it would leave on the 200-plus ratepayers of National Park.

"We are looking at doing alternative energy but we're scared if we do that then the town will suffer and we don't want the town to suffer. One option is for the town to completely go self-sufficient."

The Lines Company - the only distributor of electricity to 20,000 homes, farms and businesses from Otorohanga to Ohakune - introduced capacity-based pricing in 2007.

The move aimed to reduce peak loading on the network, but can increase costs for some users.

National Park School principal Terry Hemmingsen said the school could not afford to heat its swimming pool in winter because of high lines charges.

He was investigating installing wind turbines on school land to generate power for the whole community.

Discovery Lodge co-owner Andy Harland said the $42,000 a year he paid in lines charges was "destroying" the business.


He and son Callum spent $55,000 importing and installing a German gas boiler to heat water at the lodge and reduce their electricity use.

Ruapehu Alpine Lifts general manager Dave Mazey said the Whakapapa and Turoa skifield operator had not ruled out switching to diesel generators to avoid the $1.1 million in lines and transmission charges it incurs each year.

But Mr Mazey said going off the grid would be unfair on those who remained connected.

Owhango farmer Richard Steele said his sister was the first of his extended family, who between them had about 12 houses and farm sheds on his land, to go entirely off the grid.

He said the annual lines charges for the properties, which included a tourism venture, were crippling and other family members were preparing to follow suit.

The Herald understands as many as 40 complaints have been lodged with the Electricity and Gas Commissioner.

At a small protest in Taumarunui last month, residents called for a ministerial inquiry.

But Energy Minister Phil Heatley said he did not have legislative or regulatory powers over any lines companies. However, the Commerce Commission is investigating whether there has been any conduct or misrepresentations by The Lines Company in pricing claims, or any practices that might breach the Fair Trading Act.

Although the Electricity Authority has not found any breaches, it is planning its first review of approaches to electricity lines pricing this year, and The Lines Company's pricing methods will be part of it.

Lines Company chief executive John Anderson said he was aware of the Commerce Commission investigation into the company's newsletters.

However, he said, the commission had previously noted the company's charges were lower than was sustainable long-term.

"We're about to go out with consultation to our customers on ways which between our customers and ourselves we can reduce costs rather than necessarily increase prices."

He said the company was trying to avoid pushing prices beyond what people could afford to cater for some loads which could be supplied by alternative energy or reduced by people managing their use better.

It was trialling 250 new meters and in-home displays tracking electricity consumption, and telling residents when the company is load controlling.

The company's relationship and communications manager, Elizabeth Anglesey, said it did not encourage customers to go off the grid because it left a higher cost for those left on it, but partial sustainable energy options were a good idea for businesses that had "rogue peaks".

Landlord wins fight to cut costs

When Otorohanga landlord Darryl Reynolds was hit with a $360 lines bill two months after a tenant left his two-bedroom rental home, he asked The Lines Company to explain the rise.

It turned out a leaking hot water cylinder had caused a spike in power at the house in September last year, increasing Mr Reynolds' monthly lines bill from about $30 to $180.

Mr Reynolds, who owns three rental properties in Otorohanga and more in Auckland, said the bill could deter tenants.

"What tenant is going to move into my property and pay $45 a week before they even put the kettle on? That's what it boils down to."

Now a truck driver in Australia, Mr Reynolds disputed the charge and applied for landlord relief from The Lines Company, which reduced the monthly bill to $69.

The new policy allows landlords to claim relief if a property is unliveable or if a tenant has caused a spike in power.

A second policy allows new home owners or renters to work out a new load if it is likely to be dramatically different to that of the previous occupants.

But Harcourts Real Estate in Otorohanga says buyers and tenants should check lines charges on properties first.

Late last year, Electricity Commissioner Judi Jones issued a decision directing The Lines Company to reduce charges on an empty rental property.

The binding decision said the company was entitled to charge a metering fee, but if there was no demand on the property it could not charge for it.

But the company said the decision was out of the Commissioner's jurisdiction and it would not be bound by it.

Q&A: King Country power play
What is The Lines Company (TLC)?

The only electricity distributor to 20,000 customers in the King Country, TLC covers 13,700sq km and has no large urban centres to subsidise a low level of users.

Who owns The Lines Company?

The Lines Company is 90 per cent owned by the Waitomo Energy Services Customer Trust, whose shareholders are members of the community. TLC split from King Country Energy in 1999 when the Electrical Industry Reform Act 1998 became law to ensure electricity prices were kept low for all consumers.

What is capacity and demand pricing?

Capacity is the ability of the network to deliver electricity and demand is the amount of load a user puts on the network. Capacity and demand pricing lowers the proportion of network costs paid by low energy users and full-time residents but increases costs to users of large amounts of power when the network is heavily loaded - such as tourism operators, or those who use big amounts sporadically, including holiday home owners.

When was it introduced, and why?

It was introduced in 2007 to help reduce peak loading. TLC charges consumers a monthly rate based on the average of the top six two-hour periods over a year. Customers pay a separate bill directly to TLC for lines charges and the new charge remains in place for 12 months.

What has been the effect on residents and businesses?

Winter tourism operators in the Ruapehu district can pay up to three times their power bill. Landlords and farmers must pay lines charges on vacant houses and any debt left by previous tenants.

Who has become involved in the issue?

Former National MP for Rangitikei Simon Power said 70 per cent of all complaints to his office were about The Lines Company. The Ruapehu District Council, the Electricity and Gas Commissioner, the Commerce Commission, the Minister for Energy Phil Heatley, and Rangitikei MP Ian McKelvie have received complaints.