Minister Needs To Put Hard Word On Generators

30 October 2001

Media release

Energy Minister Pete Hodgson needs to put the hard word on electricity generating companies to reduce their prices.

Commenting on the Minister’s warning to line companies to offer low fixed prices to domestic customers, Michael Barnett, chief executive of the Auckland Regional Chamber of Commerce said a similar “hard line message” needs to be delivered to the generators.

When water was in short supply in the country’s lakes and power demand high over the winter months, the four government-owned and one private sector electricity generating companies forced up prices by an estimated 30%.

“With lakes now filling up with water and power demand lower, the generators should be bringing prices down - but they aren’t, which shows the market isn’t working,” he said.

Minister Hodgson may be well intentioned in putting the hard word on retailers, but the focus seems to be wrong, said Michael Barnett. “It is in the power generation area - not the retail side - where there is clearly a lack of true competition.”

He noted that at least two of the generator SOEs - Mighty River Power and Meridian Energy - who were also retail companies, had not yet lifted retail prices.

“The Minister should give an assurance that they won’t take advantage of their monopoly position as both a generator and retailer, and increase prices.

“With the pressure coming off power generation, there is no longer any justification for lifting prices - either at wholesale or retail levels,” concluded Mr Barnett.

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