Prepare for more power bill rises

Wairarapa consumers should brace for price rises this year, with Contact Energy announcing a 5 per cent rise from April 1.
Contact is citing a 25 per cent rise in natural gas prices as one of the reasons for its average 5 per cent surge in electricity prices in Wairarapa from April 1.
Genesis Energy, the biggest power player in Wairarapa, says it will review its prices later in the year, but indicated it would seek to recover the cost of complying with the Government's Emissions Trading Scheme.
Contact Energy communications adviser Louise Griffin said the company, which has 1900 customers in Wairarapa, had held off price rises in the region for ''as long as possible''.
''Increasing prices is never something we take lightly and only consider when it is clearly needed,'' she said.
''We've held prices in Wairarapa for as long as possible and have limited the size of the increase as far as we can. But prices now have to move to start to reflect the true cost of energy and increasing third-party costs.''
Mrs Griffin said the increase would be the first in the region since November 1, 2008. The costs of generating electricity had increased 9 per cent over the six months to the end of December 2009, driven by factors like a 25 per cent increase in natural gas costs over the 2009 financial year. She said gas was used to generate about 20 per cent of the country's total electricity.
''Additionally, over the country electricity distribution and transmission attracts third-party costs _ which contribute to the final bill _ that have increased on average by 5 per cent over the six months to the end of December 2009. These are sharp increases in third-party costs which Contact cannot control and needs to pass through,'' Mrs Griffin said.
Increasing costs meant current electricity prices did not cover the cost of running gas-fired power stations that were critical to the country's energy security.
''They [electricity prices] also do not support investment in new power stations that New Zealand now needs,'' Mrs Griffin said. ''Contact is leading investment in new energy developments with three projects representing $600million of investment being commissioned this year.
''Additionally, we have billions of dollars of new electricity generation projects in various stages of development but the costs of these developments must be reflected in energy prices and they are not currently.'' On Wednesday Genesis Energy chief executive Albert Brantley confirmed before Parliament's finance select committee his company ''will recover the cost'' of complying with the Government's Emissions Trading Scheme.
Echoing Genesis Energy's plan to review electricity prices in Wairarapa later in the year, Mrs Griffin said the introduction of the ETS in the middle of the year would also place pressure on prices. ''We understand nobody likes paying more for anything, be it petrol, food or electricity.''
She said New Zealand's prices remain low by international standards. Meanwhile, Genesis Energy public affairs manager Richard Gordon said the company expected it would take some months to ''assess the impact of the ETS on our cost structures before we make any decisions on passing through the cost of carbon to our retail customers''. Genesis is the biggest player in the Wairarapa residential electricity market with 28,872 customers and has an overall market share, including commercial consumers, of about 70 per cent. Contact Energy has about 22 per cent of the market, Meridian 7 per cent and Masterton-based PowerShop 1 per cent.
PowerShop chief executive Ari Sargent said his company used a seasonal pricing scale and expected an increase in price for winter. ''For an average household our current prices are 23.28c/kWh, winter power is currently available at 26.69c/kWh and spring is 23.99c/kWh. Our annual average is 25.59c/kWh,'' he said.
''Figures from the latest Ministry of Economic Development survey of domestic electricity prices showed that an average 8000 kWh consumer would save more than $100 with Powershop compared with Contact and around $90 compared with Genesis.''