1 Nov 2011

Power bills set to climb 5% over three years

8:06 pm on 1 November 2011

Residential power bills are set to rise by 5% over a three-year period starting next year.

The increase is to pay for the upgrade of the national grid.

Transpower will spend more than $2.6 billion over that period on new lines into Auckland and a backup line across Cook Strait.

Spending for next year alone will rise from nearly $350 million to $1.5 billion.

Transpower will charge power companies and large energy users almost 50% more over the three years to recoup the cost of the upgrade, and those charges will be passed on to residential customers.

The Commerce Commission, which sets the amount Transpower can raise through increased charges, has approved a request from the grid operator to raise charges by more than 20% from next year.

The commission expects the increases will be handed on to consumers but says the extra cost must be balanced with the need for greater investment in the national grid.

KPMG's energy chairman, Greg Bishop, says the upgrades will provide better security of supply.

He says, without the work, the system would eventually fail to cope with the growing demand and even minor problems would lead to power failures.

Ralph Mathias, from the Major Electricity Users Group, says the system isn't degraded yet, but the move will ensure the good service continues into the future.