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Meridian Price Hikes Show Market Failing

Green Party co-leader Jeanette Fitzsimons said today that possible big increases in electricity prices for Canterbury businesses shows why a competitive electricity market does not work for consumers.

"We have a pseudo-competitive market based on a single supply system. Hydro stations ought to be run as an integrated system throughout the country. Instead we have regional suppliers trying to shed the risks created by a lack of integration."

Meridian Energy has notified 60 Canterbury businesses that it will not renew their fixed-price contracts and that they would have to pay the volatile spot rate for electricity.

Ms Fitzsimons said it was absurd that Canterbury businesses were being denied electricity at predictable prices, when so much of the nation's electricity was produced very close by.

"The situation where some users are going to be punished because they're in the wrong place at the wrong time was always going to happen. As a nation, we can't afford to allow electricity suppliers simply to off-load their risk onto other businesses.

"Meridian has the know-how to manage spot risk, whereas other companies don't. It's their job to do that."

"Even if the experience of last winter means the prices of fixed-price electricity contracts have to rise, that is more acceptable than the complete uncertainty businesses are facing now."

Ms Fitzsimons said state-owned Meridian was taking the wrong approach to lessons learned from last year's electricity crisis.

"Electricity suppliers should focus on helping businesses to conserve energy and reduce their electricity demands, instead of hanging them out to dry.

"There are also a lot of intermediate steps which Meridian could take to share risk and encourage energy conservation - such as offering businesses a fixed price contract with some load interruptible (such as households use for hot water heating), or negotiating a contract which includes a small percentage of spot price electricity."

Ends

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