5 Mar 2014

Inquiry into power price rises

9:03 pm on 5 March 2014

The Electricity Authority says it is unacceptable that different parts of the industry are blaming each other for price increases.

The industry watchdog announced on Wednesday it will investigate the reasons power companies are giving to justify higher power bills.

Arapuni hydro power station.

Arapuni hydro power station. Photo: PHOTO NZ

The supply companies have been blaming lines companies for raising the costs of electricity supplied to them, but the lines companies say the supply companies' increases are higher then the prices they are charging.

Electricity Authority chief executive Carl Hansen said as part of its investigation it will be checking public statements the companies are making about the increases, including letters they send to customers.

"We've noticed over the last week or so that different parts of the electricity industry have been blaming each other for the price rises.

"We think our role as an independent regulator is to promote the longer term interests of electricity consumers, and we really think that starts with consumers being given the facts."

Mr Hansen said the investigation is likely to take several months.

Meanwhile, the Labour Party has accused the Electricity Authority of not being independent in its analysis of power prices.

Deputy leader David Parker said the regulator discredited itself by constructing an argument against the Labour and Green model of a central power buying agency.

Mr Parker was speaking at the Downstream Electricity Conference in Auckland on Wednesday in a debate with Mighty River Power chief executive Doug Heffernan and Green Party co-leader Russel Norman.

Electricity Authority chair Brent Layton has said that the Labour-Green policy is not in the long-term benefit of consumers.

It followed a report by the regulator that concluded recent price rises were due to electricity charges being set far below the cost of supply for many decades.

Mr Parker said the authority made several incorrect assumptions in its analysis of historic power prices.

"I think they were trying to construct an argument against our model rather than being the independent regulator that they ought to be cos I can't understand how they could make all of those mistakes. I thought that that attack on our policy was crap."

Mr Heffernan said change is needed, but not what is proposed.

"I don't think the case for single buyer has been proven. Indeed I think there's been significant uncertainty raised about the associated risks. Transparency is a real risk. As a customer they don't even know who to ring when there's a fault. It's time to change - separate lines and energy and make it really simple."

Mr Heffernan said policymakers need to enable innovation in the electricity market and help alleviate fuel poverty.