Trustpower's Withdrawal Another Electricity Market Failure.

GreyPower regrets the withdrawal of Trustpower from the residential electricity markets in Christchurch and Wellington, says GreyPower's national president, Graham Stairmand. "The Minister of Energy has relied on competition in the retail electricity market to control prices," he said. "A competitor pulling out raises the risk of unjustifiably large price rises."

However, Trustpower probably had little choice. "We think this is a repeat of what happened to On energy in 2001. Like On energy did, Trustpower generates less electricity than it sells. It probably has significant exposure to spot prices, so in the present circumstances it will be selling electricity to its consumers at below cost. In 2001, for the same reason, On energy headed for disaster and was forced to sell its customer base. Trustpower has chosen instead to advise its customers to move to other suppliers or face price increases." he said.

"Other retailers will almost certainly raise their prices as well, in the near future" he said. "Changing to another supplier will gain only a few months of lower prices at most. We also recommend that, if you decide to change supplier, you should shop around carefully. Check the performance of other suppliers by asking their consumers if there have been any problems. It may be much less stressful, and possibly cheaper in the long run, to stick with the devil you know."

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