Transpower's grid upgrade will push power bills up

Power retailers around the country will soon be the bearers of bad news for customers nationwide.

New Zealand power retailers say they will have to ‘pass on’ price hikes to their customers this year due to upgrades to the national power grid, operated by Transpower.

The price rise around main regions is expected to be about 5%, with houses in the Far North likely to have the biggest increase of 10% or an extra $150 or more a year for big power users.

Transpower is not commenting on how much it is planning on raising its grid charges by, nor will it compare the upcoming hike to previous years rises.

Transpower’s grid manager John Clarke only spoke out about how things would only get easier for consumers.

“We are spending a lot of money across New Zealand to ensure a reliable supply after quite a few years where there wasn’t a lot of high investments into the grid. We’ve currently got over 90 projects in operation at the moment.”

Mr Clarke had warned lines companies that these grid charges would rise over time and says they’ll most likely continue to rise through to 2015.

Trust Power, a major power retailer says price hikes for consumers are inevitable given Transpower’s price hike and the costs it is facing.

Trust Power’s community relations manager Graeme Purches says another reason prices will be rising is because they have been stalled for past year already.

“There have been artificially low prices across the country because of competition created by the need for state owned enterprises to swap assets and some loss leading start up companies out there.”

A vast majority of power retailers are unable to comment on Transpower’s price hike, but Orion has come forward to explain the situation further.

Its chief executive Rob Jamieson says its been handed a bill from Transpower which is 20% ($10 million) higher than the previous year.

“We’ve got about $70 million worth of extra costs facing us because of the earthquakes. Revenue is currently down because volume is down,” said Mr Jamieson.

“For example, there are a lot of hotels in central Christchurch that aren’t occupied. We’ve absorbed a lot of cost increases and we currently can’t fund Transpower’s grid at the same time.”

Meridian Energy, a major power retailer in the Canterbury region, says its prices have more to do with the devastating impact on infrastructure caused by the earthquake.

“In the Rangiora Kaiapoi area, which were badly hit by the earthquake and the snowstorm, their’s has one of the higher increases for the average residential customer which equates to around or slightly more than 5%,” says Bill Highet, general manager for retail at Meridian.

Spokesperson Richard Gordon of Genesis Energy, the country’s largest power retailer, says at the moment Wellington, West Auckland and the North Shore are the only areas where it’s putting up its power prices.

“On what we call a ‘classic’ plan for a low power user, they will see roughly around a $70 a year increase to their power bill. Customers who are higher users who use more than 8,00KW hours a year will have their power bills increase around $97 per year.

Contact Energy, which has over 440,000 customers nationwide, says it has no immediate plans to pass on the higher Transpower charges to its customers.