Powerco Removes Fixed Daily Line Charges

Powerco’s new pricing structure to electricity retailers contains no fixed charges for residential users, Chief Executive Steven Boulton announced today.

The change effective from 1 November 2001, means that Powerco will be charging retailers based solely on the amount of electricity consumed for those users who have a peak demand of less than 100 kVA (this is equivalent to the demand of around 30 homes). Charges to other user groups (large commercial and industrial customers) will continue to include fixed and variable components.

One of the other key aspects of the new line charge structure, is the inclusion of pricing signals to retailers that are designed to encourage network utilisation and energy efficiency. This encourages them to install equipment that allows efficient management of electricity load peaks, said Mr Boulton. “This aspect of the pricing structure is a positive step toward energy conservation,” he said.

“We are also happy that we have been able to meet the government policy statement of having less than 10% of our line rental fixed,” said Mr Boulton. However, the impact on residential users will depend on how the retailers operating on Powerco’s networks choose to interpret the structure into tariffs for their customers.

“Over and above these changes, we have also been able to reduce the overall charges to retailers for using our lines,” Mr Boulton said. Under the new structure, around 70% of residential users would see a reduction in their line rental costs if passed straight through by the retailer.

The new pricing structure has a number of advantages including encouraging energy efficiency, sending more accurate investment signals to the industry, and being less complex, Mr Boulton said.

Powerco is New Zealand’s third largest electricity and gas utility with around 205,000 customer connections. Powerco has networks in Taranaki, Wanganui, Manawatu, Wairarapa and Wellington with an asset base approaching $875m.

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