Case put for cut in S.I. power charge

Press, 12 July 1980, Page 6

Case put for cut in S.I. power charge

The Government will be told that retail electricity tariffs should rise an estimated 9 per cent in the North Island and fall 24 perl cent in the South Island. An over-all differential ofi 33 per cent in tariffs be-i tween the two islands based: on the cost of power generation and transmission is proposed by the South Island Local Bodies Association in a submission to the! Minister of Energy (Mr] Birch).

A delegation from the] association will seek a meeting with Mr Birch to push] for a reduction in South Island domestic power charges. The submission holds that the standard bulk tariff throughout New Zealand means that South Island consumers are subsidising North Island consumers by $3l million a year. The average costs of hydro generation in the South, it says, are substantially below North Island costs for both hydro and thermal generation. The present pricing policy failed to recognise “significant savings” in costs arising from South Island Hvdro generation. “Indeed, this pricing policy is in direct contradiction to the Minister’s stated objective of . relating tariffs to the cost of supply,” the association says. The submission puts the

'standard bulk tariff 54.8 per' • cent above South Island costs, but 22.5 per cent ibelow North Island costs. j ■ If the North Island had to: ! produce all its own elec-, i tricity, on 1979 average' costs Its retail tariffs would] need to be 45 per cent high-; er than those in the South. Island, according to the submission. ! “On the basis of costs, a] separate" bulk tariff should: be derived for the North and': South Islands, so that the latter receives the benefit of, cheap hydro power which is an indigenous local resource." . i : .The association says dififerential tariffs are used in

■Sweden and are not a new concept. The differential would be Seven larger in the future, it ] says, because of running ; costs for thermal stations — ' the main emphasis in North ]lsland generation — are 'higher than those of hydro plants. It seems logical to use •cheap natural gas in the .'North Island and have cheap ■electricity in the South, • according to the association. Differentia! bulk power (tariffs would also be an encouragement towards the retention of the South Isi land’s workforce and enab.e the establishment of “clean air zones," it says.