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Nelson Mail Item Re Price Increase Misleading

Nelson Mail Item Regarding Price Increase Misleading

An item sent to NZPA by the Nelson Mail yesterday claimed that TrustPower's latest price increase in that region, which takes effect as from 18 June, was the second price increase in a year. This is not correct.

The last increase appeared on customer bills processed as from 25 July 2002, but because it was a "flat" increase, it effectively applied to electricity consumed as from 11 June 2002.

Later last year TrustPower changed its system of applying price changes from a "flat" basis to a "pro-rated" basis. This means that the change now applies to ELECTRICITY USED from the date of the price increase. This change was made in response to requests from customers for a more equitable system of introducing price changes.

This means that Nelson customers have NOT had two price increases in the last year.

TrustPower has a policy of reviewing its prices annually on a region by region basis, unless there is a reason to change that, such as an out of schedule change in line charges that breaks that cycle. Where that occurs, the reason is clearly outlined at the time of the price change announcement. In some regions, these TrustPower's price reviews have actually been delayed,. This has been because of the pressure of work involved in processing price changes made necessary by changes in line charges that have occurred elsewhere, thereby forcing the review to be pushed outside the usual TrustPower r12-month cycle.

Apart from in regions where there have been changes in line charges, e.g. Central Otago, TrustPower's price increases have simply been reflecting increases in long-run wholesale electricity costs, and to a minor extent, a small increase in retail overheads and costs. They have absolutely nothing to do with current high spot market prices, because electricity for residential and small business customers is not purchased or sold on that basis, and the increases have nothing to do with the current electricity supply situation.

The TrustPower annual regional price review process has, in TrustPower's view, the effect of giving consumers more certainty than doing so on a more irregular basis.

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