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Good Outlook For Electricity Retail Competition

Consumers are enjoying the opportunities created by the Government s electricity policy initiatives, by changing electricity supplier in order to lower their electricity bills, Enterprise and Commerce Minister Max Bradford said today.

Mr Bradford was commenting on a Ministry of Commerce report on progress with retail competition for households. “The report provides further evidence that the electricity reforms are working for New Zealanders,” Mr Bradford said.

The main points in the Ministry report are:

- Optimism about the overall prospects for competition, although the Ministry expects that the pattern nation-wide will remain uneven for some time.

- The number of domestic consumers who have switched appears to be consistent with experience in other countries during the first year of competition. - Consolidation of newly acquired retail assets and ensuring retailers are able to deliver to their existing consumers has been a major preoccupation for the larger retailers, but this phase is expected to be over soon. - While there are concerns about a significant number of process and contractual issues constraining competition, it is generally accepted that many of them are transitional. - No examples have been found of unavoidable switching costs passed to consumers.

“Clearly the progress so far, considerable as it is, is only the beginning,” Mr Bradford said.

“It is clear that retailers intend to continue to compete vigorously in the market.

“We are already seeing innovative new marketing initiatives such as offers to farmers, deals involving packages with telecommunications and television and funding for schools.

“I have no doubt that the future will see more creative deals being put together by retailers in their competition for customers,” Mr Bradford said.

Between 40,000 and 50,000 consumers have switched power supplier to get lower prices. Sixty two per cent of households can now pay less for their electricity than in April last year when the reforms were announced, if they choose to switch.

“Of course it is very much over to consumers to exercise their choice. This is the best way to ensure lower prices.

“It is irrefutable that the reforms are working for New Zealanders, Mr Bradford. concluded.

The Minister has released the Ministry of Commerce report and a full copy is available from the Minister”s office.


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