Northpower Line Charge Increase

Friday 24th February 2006

Northpower Line Charge Increase

Line charges for electricity retailers operating in Northpower’s network will increase from 1 April 2006.

The overall line charge increase will be 5.8%. Northpower’s component will be 3.6%. The difference between 3.6% and 5.8% is due to the increase in Transpower's charges.

The impact of the changes on retailer prices is unpredictable as Meridian, Genesis, Contact and Mercury are not obliged to pass the line charges directly to their customers. Should the retailers pass the increase directly to the customer, the expected impact on a monthly power account for the average domestic consumer would be $2.70.

Northpower Chief Executive, Mark Gatland said that the increase in line charges is necessary to ensure prices and returns do not fall below accepted commercial rates.

“Unfortunately the increased regulation of the industry is adding significant complexity and cost to Northpower’s lines business,” he said.

“Northpower is one of only three line companies in New Zealand allowed to increase prices by 1% more than inflation. The company’s ability to increase prices by this margin is directly related to our low line prices and efficient operation,” he said.

“Northpower’s line charges are regulated by the Commerce Commission under the government price regime and even with the current increases our prices continue to remain below the threshold set for the company,” Mr Gatland said.

Northpower maintains the philosophy of returning millions of dollars to customers through line charge holidays every year. In addition to the line charge holidays customers also receive dividends from the Northpower Electric Power Trust (NEPT).

Regardless of the increase the company will continue to have some of the lowest average prices for electricity delivery in New Zealand.

ENDS

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