9 August 2006
Fixing Vector's profiteering should not penalise households
The Commerce Commission has to ensure that it is the lines company Vector, and not Auckland householders, that bears the
brunt of the Commission's dramatic attack on the alleged "excessive revenues" being extracted by the lines company,
Green Party Co-Leader Jeanette Fitzsimons says.
Ms Fitzsimons was speaking in response to the Commerce Commission's intention to take control of Vector's electricity
distribution services, on the grounds that it has been making excessive profits, thanks to a pricing regime that
allegedly overcharges its commercial and industrial users, and undercharges its residential users.
"The core problem - Vector's excessive profits - are being extracted from both commercial and residential users. I would
be very concerned if the Commerce Commission should set some arbitrary 'golden mean' rate of return between commercial
and residential users.
"In the real world, households are already having trouble paying their winter power bills.Any re-adjustment has to
consider what a justifiable rate of return would be. Some differential between commercial and residential users can be
justified, since commercial users can claim back the GST.
"The lines charges make up about 30-40 per cent of the average residential electricity bill. The Commerce Commission
has signalled that it would expect there to be about an 8 per cent increase in the amount paid for this service by the
average residential user.
"There will be households that will be hit harder than others by that level of increase. Any changes have to be phased
in gradually, because other increases in power charges in recent years are already putting more and more families in
financial trouble, and leaving them unable to pay their power bills.
"A full and proper review of this situation provides an opportunity to reduce the high fixed charges that are a
dis-incentive to spend money on energy efficiency - such as insulation or solar water heating."
ENDS