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Contact Energy’s Claims Refuted

Electricity Networks Association

19 February 2014

Contact Energy’s Claims Refuted

The CEO of Contact Energy’s claim that electricity distribution companies are ‘stifling innovation’ is an attempt to divert attention from issues much closer to home, says the Electricity Networks Association.

The Association represents the country’s 29 distribution companies.

“It seems a pretty blatant attempt to obscure a hefty profit lift by Contact when electricity prices are such a sensitive issue for companies like his,“ the ENA’s Chairman, Ken Sutherland, says.

“Mr Barnes claim that ‘network charges are about half the bill’ and that Contact’s ‘are only about one-third’ is also misleading.”

“The truth is almost exactly the opposite.”

“Independent analysis of official data by accounting firm PriceWaterhouseCoopers (PwC) showed that the combined generator-retailer portion of a typical domestic power bill was 52%, “ he says.

“Contact is a combined generator-retailer, and it would be highly unlikely that their percentage would be very different from this.

“The same data showed that the combined Transpower and distributor charges amounted to less than a third of the total.”

“And not only that, but distributors are essentially paying Transpower to bring Contact Energy’s power to the marketplace.”

Mr Sutherland says that in case there were claims that domestic users were getting better treatment than commercial and industrial users, the Association also had PwC look at the breakdown of the overall New Zealand power bill.

“This painted an even starker picture, with the combined distribution and Transpower charges amounting to just 28.5% of the delivered power bill.”

“As for the claim that different distribution charging options are inhibiting Contact Energy’s ability to ‘innovate’ goes, our industry’s first priority is to meet consumers’ needs,” he says.

“Customers are not a homogenous commodity. Their needs vary depending on their location and circumstances, and our charges reflect this.”

ENDS

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