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Contact Energy – Retail Electricity Prices

Contact Energy – Retail Electricity Prices

Contact Energy today confirmed that a routine adjustment to its retail prices in Wellington would increase tariffs for a typical household by 11 cents a day.

Contact has not reviewed prices in Wellington for a year and this latest tariff changes is consistent with changes announced in other parts of the country over the past few months. Contact Energy’s general manager sales and marketing, Steve Cross, said it was wrong to link the routine tariff review with the recent volatility in the wholesale electricity spot market.

“These decisions were made well before the recent wholesale market activity. As Contact has said repeatedly in the past, there is no connection between short term wholesale market spot prices and retail electricity tariffs.

“Indeed, quite the opposite is the case. Residential and commercial consumers are shielded from the short term impacts of the spot market precisely because they buy their electricity at fixed tariffs.”

Mr Cross stressed that although some industrial consumers have been exposed to recent high spot prices, the vast majority of all electricity consumed in New Zealand is sold under long term contracts at fixed prices.

“In other words, there is no direct impact from recent spot price movements on the vast majority of consumers.”

Over the medium to long term, retail tariffs would rise or fall according to the medium to long term trends in wholesale electricity prices, not short term volatility reflecting particular circumstances at a certain point in time.

The latest tariff changes reflect a medium to long term outlook that power prices will be higher than in the past.

“This acknowledges the fact that the cost of new generation will be higher than in the past.”

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