Consumers challenge Unison line charge increases

Consumer Coalition On Energy (Cc93)
Spokesperson: David Russell

The Coalition:

Business New Zealand
Consumers’ Institute
Federated Farmers of NZ Inc
Major Electricity Users’ Group

28 January 2004

Media release: Consumers challenge Unison line charge increases

''The 23% average increase in line charges announced by Unison for the 103,000 consumers in the Hawkes Bay, Rotorua and Taupo regions is at the least precipitous and we believe the Commerce Commission should use all its powers to protect the interests of consumers by seeking a stay in changes to prices until a full investigation is completed,'' said David Russell, spokesperson for the Consumer Coalition on Energy (CC93).

“The main reason for the announced increases appears to be to provide capital to replace aging assets and for expansion to meet new demand. As and when new assets are added to the network, costs may rise, and at that point charges can reasonably be expected to increase, but this shouldn’t happen ahead of those assets being built. Also to be considered is whether the investment program is reasonable and whether the rate of return reflects the relatively low risk of the line monopoly. There is every incentive on Unison and other line companies to build assets ahead of when they are needed and to push for profits above fair returns.

“The announcements by Unison appear to be a return to the days when line companies routinely and unilaterally announced price rises. Consumers have not been consulted by Unison on the price rises or the reasons for them.

The Commerce Act was changed in 2001 and the Commerce Commission given the task of overseeing the regulatory regime so that consumers were not prone to such behaviour. We now ask the Commission to seek a stay in any price rises until the reasons for those have been discussed fully with both consumers and the Commission,” concluded Mr Russell.

ENDS

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