8 July 2004

Good For Some, Rotten For The Rest

The Minister of Energy's decision to cap the fixed charge portion of power bills for low electricity users will push up costs for heavier users, said Charlie Pedersen, Vice President of Federated Farmers of New Zealand (Inc).

"The rationale for the low fixed charge option is to assist low users on fixed incomes. But such blanket controls mean all low users are rewarded irrespective of income or assets.

"Ultimately ordinary New Zealanders will bear the cost associated with this decision through higher charges, as electricity firms attempt to recoup losses from other customers," Mr Pedersen said.

The regulation announced today will cap at 30 cents a day the fixed charge portion of a power retailer's tariff, for users of less than 8,000 kilowatt hours of power a year.

"Though that is good news for people who for some reason use small amounts of power, it is a financial blow for families and businesses which end up paying higher charges.

"If there are concerns about the ability of some consumer groups to pay for electricity, help should be targeted through the social welfare system in the form of, say, direct grants. This approach would match other targeted forms of assistance and avoid the crude blanket approach handed down by the Minister," Mr Pedersen said.

ENDS

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