Squeals of pain over power rises

By PAULA OLIVER

Small and medium businesses may be forced to shut their doors as rising power prices wipe out their profits.

Nightmare tales of power bill increases as high as 700 per cent emerged yesterday from small businesses around the country.

A Blenheim supermarket owner said the new power contract he signed last week would double his costs and wipe out his profits.

Others, including a care centre for the elderly, have talked of closure if they cannot make ends meet.

Many of the increases are being forced on businesses as their fixed-term power contracts come to an end.

Several power retailers have refused to negotiate new contracts and, if one is offered, the going rate has been at least double the previous deal.

Business New Zealand chief executive Simon Carlaw said the increases would simply be unsustainable for many small businesses.

"It could have disastrous impacts on their viability," he said.

A number of two-year contracts have this month come up for renewal at the top of the South Island, where TrustPower has a strong presence.

TrustPower does not have the generation capacity to cover all its customers, and is being forced to buy its electricity from other generators at a higher cost.

Blenheim supermarket owner Blue Derry of Fresh Choice Springlands told the Herald yesterday that when his contract with TrustPower ended, it offered him a new one at four times the amount.

He signed a two-year deal with Contact Energy which will double his costs.

"The difference is huge. It'll take our profits. Eventually businesses are going to have to increase their margins and put prices up.

"But that's a big risk in the highly competitive supermarket business."

Chris Stokes, a director of Ashwood Park Retirement Village in Blenheim, said his business was being squeezed from every direction.

"Our power costs have now doubled. It's one of our biggest costs. I have to say, you start to wonder if it's worth having $8 million invested in a business when you keep getting screwed like this."

Other cases of electricity woes have emerged:

* An Auckland manufacturer put on the spot market by its supplier was offered a contract by another retailer, with a 150 per cent increase.

* An Auckland engineering company has been advised to accept a 120 per cent increase on its contract, or it will be put on the spot market.

* A Wellington hotel saw its bill increase by 700 per cent after it was put on the spot market without being told.

Business representatives fear for the future of many small businesses.

Matthew Bellingham, a director of Hayes Knight chartered accountants, said: "It makes it really difficult for the small guy. The nature of these businesses is that they are on the breadline. That's just the way it is."

* Power savings continued to improve on Tuesday, reaching 12.3 per cent. Savings of 10 per cent over 10 weeks are needed to avoid blackouts.

Feature: Electricity

Energy Efficiency and Conservation Authority