THE COST OF POWER

power linesElectra Trust wants a halt to electricity ‘overcharging’ and ‘misleading’ ads

By Chris Turver
Electra Trust Chair 

The Electricity Authority has been asked to make it mandatory that all power bills set out the three main costs to stop ‘misleading’ advertising by the big retailers and provide for billing transparency.

In a submission the Electra Trust, which owns the company which distributes power to 42,800 consumers across Kapiti and Horowhenua, says the retail sector is allowed a measure of secrecy which is at the root cause of consumer distrust.

The three main costs involved are

  • supply from the national grid
  • distribution to local homes and businesses by lines companies
  • a range of retailer costs.

Electra Trust chairman Chris Turver says current advertising by the big retailers, blaming lines companies for small ‘pass through’ price increases, overlooks the fact that the total average retailer share of a consumer power bill is 70 percent.

Analysis by the Electra company for Kapiti-Horowhenua puts the national grid supply at 8 percent, lines distribution over 1,400 square kilometres at 21 percent after discount, and the total retailer share at 71 percent.

The retail costs are way over the top and explain why the retail companies have consistently refused to disclose their share of the costs on power bills and try to shed the blame elsewhere.

Electra’s analysis is supported by a nationwide PriceWaterhouseCooper study which last year put the national grid cost at 8 percent, lines distribution at 23 percent, and retail costs at 55 percent.

The Electra Trust has called in its submission for the establishment of a Retail Regulatory Tribunal to provide an independent overview of retail pricing and stop overcharging.

Mr Turver says while the big retailers are promoting the fact that they will hold costs until April 2015 they would do more to restore consumer trust if they outlined how they will reduce their huge costs.