25 Feb 2010

Power prices flattening out if anything - Brownlee

7:00 pm on 25 February 2010

The Government says that electricity prices aren't getting out of control and that in fact there's evidence of prices flattening out.

Three of the four power retailers are raising their prices while the fourth is putting off a decision until later in the year.

Energy Minister Gerry Brownlee says that in the years 2000 to 2008 electricity prices rose 72% - about three times the Consumer Price Index - whereas in the past year increases were in effect only 1% in real terms.

There's no evidence of prices getting out of control, Mr Brownlee says, adding that the Government is working hard at getting reforms in place to foster more competition in the electricity retail sector.

Contact Energy is putting prices up 5% for most of its customers;

Mighty River Power is raising prices by 3% on 1 April; Genesis Energy is forecasting unspecified rises; and Meridian Energy says it's holding its prices steady until October.

Time to restructure, says Labour

In many cases, the price rises - which exceed the current inflation rate of 2% - are being justified by the stated need to pay for new generation.

Labour says that's not justified: its energy spokesperson, Charles Chauvel, a former deputy chairman of Meridian Energy, told Morning Report it's time to restructure the system.

He said that instead of the Government taking a big dividend from the state-owned companies, they should be told to reinvest their profits in building new power plants.

Consumer New Zealand says less generous dividends could reduce the burden on consumers.