Thursday, 6 March 2014

Playing With Power - The Greedy Get Greedier

The Land of Plenty.  The Land of Milk and Honey.  The Land of Rising Prices.  A strong Economy.  Falling Unemployment.  It all looks rosy (except maybe the rising prices part).  And generally it is.  But what about those rising prices?  Nope not a myth, reality, and one area that really concerns me is Electricity.

50% of our power is Hydro Electric.  Cheap and generally reliable right?  Well yes, so you would think. But is it?  Ok it’s fair to say the other 50% is costly (Oil, Gas, Geothermal, Wind, other) and generally only applies to customers north of Lake Taupo.  So what of customers further south.  Well we obviously get our power from the National Grid and largely from across the Cook Strait and points south.  Yet for the second time in 4 months, the rate is going up.

I am supplied by Contact Energy and largely they are a steady reliable supplier.  But a few months back they upped the rate for power stating operational costs in Contact energy.  My power bill went from an average of $45 a month to $58 a month, a 30% rise in power costs.  Now I am informed it is going up again, and I’m not sure how that will affect my bill, but suffice to say it’s bound to be significant.  Is this fair?

Well if one reads their letter they sent their customers, one finds they are claiming Powerco, the electricity supplier, is passing on costs to retailers and accordingly prices are rising.  Yet nowhere on Powerco’s website does it say they are pushing costs up?  Even a quick look at Contact Energy’s website doesn’t mention the cost increase.  It’s fair to say, both seem to be trying to keep this under the radar.  But I will not.

The electricity sector is in a state of flux at the moment with the SOE sell offs.  If memory serves me right the sell offs were partly done to increase competition and perhaps lead to dropping of wholesale prices.  I remember when Telecom was sold off, (and other SOE’s) a lot of Telco prices increased as there was little or no competition.  The same could be said with Electricity wholesalers, there are few and they monopolise the market.

In a time where interest rates are low, wages even lower, and people genuinely struggling surely the government should be seen to be waving the big stick at electricity wholesalers (and retailers) and getting power prices down, not up.  Power is not a commodity, it is a necessity and if power companies want to play leech, they need to be reined in and soon.

I’d willingly boycott Contact Energy’s move, but regrettably I need their power. 

Editted to add on 8 March 2014

Have spoken to two friends with different power co's and their charges have increased too so not retailer issue but a wholesaler issue (PowerCo).  Open letter to PowerCo.  Why and what justification please?

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