Despite electricity price increases of more than 70 per cent since 2000 and the recent Commerce Commission report which found during a six and a-half year period customers were charged $4.3 billion more than they would have been in a more competitive market, the four major generator-retailers (gentailers) are defending their pricing and say they are doing much to help those in need.
Last month the Commerce Commission reported that while gentailers - Genesis, Meridian, Mighty River Power and Contact - had not breached the Commerce Act they had used their market power to maximise profits.
"Each of these companies has the ability and incentive unilaterally to exercise market power and increase wholesale prices during certain periods," Commerce Commission chairman Dr Mark Berry said.
"The price increases in dry periods are well above any increases in input costs, including the higher opportunity cost of water when hydro storage is low.
"However, the commission concludes in the case of this investigation that the gentailers are using that market power to maximise their profits in a purely legitimate way within the current market structure, design and rules.''
Professor Frank Wolak, of Stanford University, analysed New Zealand's electricity market on behalf of the commission.
Prof Wolak estimated the wholesale prices charged between the start of 2001 and mid-2007 resulted in an extra $4.3 billion in earnings to all generators compared with what their earnings would have been under competitive conditions.
Prices increased 72 per cent between 2000 and 2008.
Meridian Energy spokeswoman Claire Shaw said her company had increased prices in March and had no immediate plans to raise prices.
Prof Wolak's analysis had received some negative critiques and Meridian would be making submissions on the Ministerial Review, Miss Shaw said.
She and Contact Energy spokesman Jonathan Hill said prices continued to rise because of the ever-greater cost of meeting future electricity demand.
"Electricity prices need to support investment in the new power stations that New Zealand needs," Mr Hill said.
To assist those in need, Contact had helped insulate more than 5000 houses and sponsored the University of Otago, Wellington, Housing and Health study, Mr Hill said.
Meridian gave its customers ‘‘lots of help and advice on how to save energy and as a result save money'', Miss Shaw said.
The company sponsored an organisation that retro-fitted houses with insulated curtains. Meridian also owned a subsidiary that looked for ways to make homes healthier and more efficient, she said.
Genesis spokesman Richard Gordon said his company was not commenting on the Commerce Commission's investigation and was not planning price increases in the coming months.
The Star had not received a response from Mighty River Power at the time of going to print.
