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Fixing Vector should not penalise households

9 August 2006

Fixing Vector's profiteering should not penalise households

The Commerce Commission has to ensure that it is the lines company Vector, and not Auckland householders, that bears the brunt of the Commission's dramatic attack on the alleged "excessive revenues" being extracted by the lines company, Green Party Co-Leader Jeanette Fitzsimons says.

Ms Fitzsimons was speaking in response to the Commerce Commission's intention to take control of Vector's electricity distribution services, on the grounds that it has been making excessive profits, thanks to a pricing regime that allegedly overcharges its commercial and industrial users, and undercharges its residential users.

"The core problem - Vector's excessive profits - are being extracted from both commercial and residential users. I would be very concerned if the Commerce Commission should set some arbitrary 'golden mean' rate of return between commercial and residential users.

"In the real world, households are already having trouble paying their winter power bills.Any re-adjustment has to consider what a justifiable rate of return would be. Some differential between commercial and residential users can be justified, since commercial users can claim back the GST.

"The lines charges make up about 30-40 per cent of the average residential electricity bill. The Commerce Commission has signalled that it would expect there to be about an 8 per cent increase in the amount paid for this service by the average residential user.

"There will be households that will be hit harder than others by that level of increase. Any changes have to be phased in gradually, because other increases in power charges in recent years are already putting more and more families in financial trouble, and leaving them unable to pay their power bills.

"A full and proper review of this situation provides an opportunity to reduce the high fixed charges that are a dis-incentive to spend money on energy efficiency - such as insulation or solar water heating."


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