Power companies warned not to use ETS as excuse to raise prices

Prime Minister John Key. Photo / Steven McNicholl

Power companies have been sent another high-level message about using the emissions trading scheme (ETS) as an excuse to raise prices when it is not necessarily warranted.

Some companies have signalled retail price increases after July 1 as a result of the ETS coming largely into effect, while others haven't.

Power companies in the retail market in New Zealand produce their energy from a varying mix of renewable and non-renewable sources, meaning some will have heavier financial obligations than others under the scheme.

Prime Minister John Key said Genesis Energy, which operates the emissions-heavy coal and gas fired Huntly Power Station and was the most exposed of all providers to the ETS, had not indicated a post July 1 price rise.

Contact Energy is putting prices up an average of 3.2 per cent because of the ETS and in the Dunedin area the percentage price rises were in double figures.

"That can't possibly be justified on the back of an emissions trading scheme, and for a company to blame the emissions trading scheme for that sort of price increase is quite incorrect," Mr Key said.

"I would caution companies to make sure they don't start blaming the emissions trading scheme and use that as a reason to raise prices if it's not justified."

Mr Key said consumers had the ability to shop around and change suppliers with relative ease and urged them to do so if they felt they were being taken advantage of.

Climate Change Minister Nick Smith has talked in recent weeks about watching how power companies respond to the ETS and said if the Government had reason to believe retail prices were going up unfairly it reserved the right to hold some form of inquiry.

- NZPA