Power Price Surge Angers Council
June 28, 2002
New Zealand's fourth largest city says the lack of genuine competition in the power industry will cost its ratepayers around a quarter of a million dollars more in the coming financial year.
When the North Shore City Council asked 11 power companies to tender for its electricity supply contract recently only one, incumbent Genesis Energy Ltd, replied.
Genesis has offered to supply the council with power for the next two years (July 2002 - June 2004) for $2.32m a year, 12.6 per cent more than its existing annual contract rate of $2.06m.
The council this month accepted the deal at a rate which is less than residential power users are paying.
North Shore City's strategy and finance committee chairperson, Tony Holman, believes the city should be getting a much better deal.
"This level of increase is unjustified and makes a mockery of the claims made by some that a de-regulated electricity sector would boost competition and lower prices," Councillor Holman says.
"For only one company to put in a bid tells the true story. Our efforts to bulk buy our power by joining forces with six other councils and two companies still failed to attract wider interest or keep the price down.
"This price surge hits two of our most critical council services: roading and sewerage. It's not fair on cities like ours to have to absorb the costs, particularly when we're dealing with environmentally critical assets such as our sewage treatment plant and street lights which need a lot of power," he says.
Independent energy advisors have told North Shore City that the Genesis offer is the best arrangement the council could expect and that re-tendering might attract even higher bids, if any.
Tony Holman says it is a bitter pill for his council to swallow having fought a losing battle alongside neighbours Rodney District and Waitakere City back in 1993 to stop the 'giveaway' of the former Waitemata Electricity. North Shore City's "Blackout Power Rally" in March 1993 featured anti-privatisation themes and predictions of hefty power rises in years to come.
"Another free-market failure exposed, but it costs us all," he says.
North Shore City Council has recently undertaken an energy efficiency review of its operations and facilities.