Power tariff to rise 9 p.c.

Press, 25 September 1980, Page 1

Power tariff to rise 9 p.c.

Bulk electricity prices would be increased by 9 per cent next April, the Minister of Energy (Mr Birch) announced in Christchurch yesterday. However, Christchurch could reduce its tariffs if the City Council stopped transferring electricity revenue to non-energy purposes, he told delegates at the annual' meeting of the Electrical . Supply Authorities’ Association ,at the Town Hall.

Agreement had been reached with the association that such transfers would be reduced but some supply authorities were still transferring 6 per cent to 7 per. cent of electricity revenues.

Mr Birch attacked “a small sprinkling”> of sup-ply-authority leaders who had criticised the bulk tariff. In an apparent reference to the Heathcote County Council’s bid to negotiate the tariff increase, he said such criticism had been made simply because it was localbody election year -and in disregard of the policies of the association;

He rejected the granting of a domestic concession to South Island consumers. He said such a concession would mean an average refund of $2 a week to the consumer and would cost $33 million a year.

Although he was “not unsympathetic” to Christchurch’s air-pollu-tion and related health problems, he maintained that electricity was the cheapest form of space heating available in the city. Christchurch’s tariffs compared favourably with those of other main centres, even though transfers of surplus revenue to nonenergy purposes was continuing. An across-the-board subsidy to South Island consumers would not attract settlement in the south but would dissipate an opportunity to channel surplus and future electricity

to “positive work opportunities”.

The 9 per cent increase would mean that the bulk tariff had risen by less than the rate of inflation in two consecutive years. The 1981-82 tariff would recover completely all running costs and would provide about 42 per cent of the capital required to maintain the electricityworks programme. The rest of the capital needed for the works programme ($221 million) would be borrowed. “We cannot, of course, allow the rate of increase to slip too much as this would simply build up the amount by which the tariff would need to be in-

creased in future years to maintain the policy of financing a substantial proportion of capital works from revenue,” said Mr Birch.

The Mayor of Christchurch (Mr Hamish Hay) said last evening that toe Municipal Electricity Department had been able to absorb a bulk tariff increase of 6 per cent earlier this year without increasing retail tariffs. “But this latest blow, coupled with substantial wage increases under negotiation and other cost increases in such items as cables, will mean that an increase in retail tariffs by the M.E.D. is almost inevitable,” he said.