New M.E.D. electricity price

Press, 19 April 1985, Page 10

New M.E.D. electricity price

Sir,—ln “The Press” of April 4 the Minister of Finance, Mr Douglas, forecasts a further rise of 21 per cent in electricity prices from April 1986. This increase on top of the 25 per cent rise in the bulk electricity price from April, 1985, will result in price increases of over 50 per cent in two years. From April, 1985, charges being levied by the Christchurch Municipal Electricity Department impose an increase of more than 29 per cent for those residential consumers who in the past have heeded both Government and M.E.D. pleas to conserve electricity. The M.E.D. operation over the past year produced a substantial surplus. Would the Christchurch City Council publicily explain why the M.E.D. increase is considerably in excess of the bulk rate increase, which forms only part of the cost, and why those who conserve power are to be penalised under the new charges?—Yours, etc.,H. HUNT. April 4, 1985. Cr Morgan Fahey, chairman cf the Christchurch City Council’s Airport and Electricity Committee, replies: “In his Budget of November 1984 the Minister of Finance announced an increase of 21.8 per cent in the cost of electricity to all South Island supply authorities. “In determining the retail tariffs effective from’April 1, 1985, it was necessary for the Christchurch City

Council not only t« pass on the effect of the Govenment-imposed increase in bulk suppk tariff, but also to compensate for the 5 per cent reduction in tariffs which applied from May, 1984. This reduction was only possible as a result of a significant strplus from the previous year (1981-84) and was not sustainable. Otier factors taken into account in determining the increase were the significant impact of the 20 per cent devaluation on the costs of plant and equipment, etc, allowances for wage increases, and inflation. “The 1985 retail tariffs have been modified considerably to reflect the call of the Minister of Energy for a rationalisation of tariffs throughout the country, and to bring a more equitable costing structure between domestic and non-domestic consumers. As a result an average domestic consumer (i.e. one who consumes 1500 units in two months) can expect to pay 15 per cent- more for electricity used, and also to pay a supply charge of $3 a month. (This translates to an increase of 24.94 per cent over all.) "The inclusion of a supply charge is new to the Christchurch M.E.D. and is based on the principle that every electricity consumer causes costs to an electrical supply authority whether or not he uses electricity, and covers all con-sumer-related costs such as meter

reading, meter testing, meter installation, inspections, consumer billing, printing and stationery, legal expenses, audit fees, bad debts, and many other office and administration expenses. “Up to this time the Christchurch M. has been the only supply authority in the South Island without a supply charge. This charge has been introduced as a direct consequence of the rationalisation of tariffs and at $3 a month is considerably less than some of the supply charges applied elsewhere n the Canterbury area. “It is not true that the M.E.D. opq-ation over the past year produced a substantial surplus. Unlike N. which now appears to have taken pver a role of tax-gatherer and appears to be setting its charges to enable significant transfers to tie “consolidated fund,” the M.E.D. intact budgeted for a cash deficit of syne ?1.4M in the 1984-85 year, and is budgeting for further significant reductions in accumulated reserve; over the 1985-86 year to allow consumers to receive the benefits accordingly. “The recent statements by‘the Minister of Finajce, Mr Douglas, regarding possible future increases in the cost of bulk electricity are certainly cause for concern and Mr Hunt can be assired that the Christchurch City Ccuncil will be actively opposing aiy such increases.”