1 October 2008
Contact’s price increase suggests weak competition
Electricity lines businesses stress that the concern over Contact Energy’s price rise announcement yesterday relates to
the unregulated energy trading segment of the electricity industry, and that their own charges have stayed flat in real
terms over a period when prices for the energy segment have risen by around 50%.
Electricity Networks Association Chief Executive Alan Jenkins says that the Government’s announcement that it will
consider a broader inquiry into the level of competition in the market will be welcomed by the lines industry, where
there is a strong interest in promoting local competition now that the ban on lines businesses generating and trading in
electricity has been partially lifted. He says that getting past the current “closed shop” of integrated
generator-retailers will become increasingly important as local supply options are being developed.
“We are aware, too, that the Commerce Commission has been conducting a protracted inquiry into the effectiveness of
competition in the wholesale and retail electricity markets. A progress report from this exercise could helpful in
improving our understanding of issues behind the Contact price increase.”
ENDS