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Power price rises "inevitable"

Power price rises "inevitable"

“Contact Energy is carrying the torch for power price rises, telling New Zealanders prices must rise to ensure security of supply”, according to Grey Power National President, Roy Reid.

In fact, Contact is maximising its profits. Its prompt-pay discounts for online payment is little more than window-dressing – only a fifth of its customers are on the tariff at present.

Mr Reid said “The state-owned companies have not to date maximised their profits, but have shown some self-restraint, as part of the requirement to be good corporate citizens. Their prices are now 2 to 4 c/kWh cheaper than the private companies’ prices. If state-owned companies are part-privatised, they will be required to maximise the value for their shareholders. This means no more self-restraint, instead they will be profiteering at every possible legal opportunity. Shareholders will demand no less.”

Contact says it is targeting big power users not households – by “targeting” they mean offering discounts for the big users. In fact it has increased its sales to these big users by 31% in the last year, while losing over 10,000 domestic customers.

This is the inevitable outcome from pure-market pricing. Companies will chase profitable big power users. “It is the small consumers whose prices will rise to ensure security of supply and that is totally unacceptable”, said Mr Reid.

ENDS

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