30 Nov 2012

Vector says it will stand up to Commerce Commission

8:22 pm on 30 November 2012

Electricity lines company Vector says it will continue to challenge the Commerce Commission, which has just ordered the company to reduce its prices.

The price cap for electricity distributors was announced on Friday and which will come into force next April.

Under directions set by Parliament, the commission can set regulations for monopoly businesses such as electricity distributors.

Vector, which supplies electricity to the greater Auckland region, has been told to reduce its prices by 10%.

Horizon Energy Distribution in the eastern Bay of Plenty has to drop prices by 3%.

The commission previously accused Vector of overcharging its customers.

Earlier this year, the Supreme Court dismissed a legal challenge by Vector which argued the way the commission set prices was wrong.

Vector chief executive Simon Mackenzie says it will continue to fight the commission, in an appeal with other monopoly networks, in order to change the way the commission makes such decisions.

Mr Mackenzie says the current method is flawed.

The commission has told 14 other companies they are allowed to increase their prices.

But an energy analyst says if power companies decide to raise their prices, there will be repercussions for rural communities where power bills could rise as much as $100 for some consumers.

Molly Melhuish, of Wellington, says that could hit the most vulnerable communities.

Two lines companies told they are allowed to lift their prices by up to 10% says they won't put up fees that much.

The Lines Company, which provides power in the central North Island, says an increase of 10% could cost its customers an extra $70 a year.

Its spokesperson, Elizabeth Anglesey, says its prices won't rise to that extent, because its customers can't afford it.

And Top Energy - given a green light to boost its charges in the Far North - says it's unlikely to raise prices in the next two years.

The commission emphasises the potential increases are optional, but the reduction of prices ordered for two companies - Vector and Horizon - is compulsory.