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Intensive Transpower regulation not wanted

Wednesday, February 1st, 2006

Intensive Transpower regulation not wanted

Business does not want intensive regulation of Transpower, the Employers & Manufacturers Association (Northern) says.

But by raising prices 13 per cent less than a year ago, then proposing a further 19 per cent increase, Transpower must have known it was inviting Commerce Commission scrutiny, EMA's chief executive, Alasdair Thompson said.

"Business consumers absolutely need Transpower to make the capital investment required, to guarantee that future electricity is delivered when and where required," he said.

"But its seeking the funds for the investment from the wrong group.

"It is not up to customers to fund capital expansion. Transpower, like any other business, should be firstly calling upon its retained earnings (past profits said by the Commerce Commission to be excessive), then from investors, (lenders and shareholders).

"The question is: Why has Transpower gone down this track?

"Our guess is that Transpower grossly ignored the government pricing formula for price increases ('inflation minus one per cent') because it is hopelessly inadequate for the scale of the huge new capital investment required.

"In true monopoly fashion Transpower has delivered a message, not just to customers but their shareholders - Government on behalf of taxpayers.

"The message is: 'we need more money and if we can't borrow enough or get enough from shareholders we'll force it out of our customers' pockets.

"Our concern is the government as the shareholder on behalf of taxpayers will keep sitting on its hands hoping Transpower gets away with it.

"In addition, Transpower needs to convince government to change the restrictive pricing formula which currently ignores the need for extensive capital investment."

ENDS

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