Bulk power rate to go up 9 p.c.

Press, 20 December 1986, Page 1

Bulk power rate to go up 9 p.c.

By

DAVID CLARKSON

New Zealand’s bulk electricity supply tariff will increase 9 per cent from April 1, the Minister of Energy, Mr Tizard, announced yesterday. , The Government has accepted the figure recommended by the Establishment Board of the Electricity Corporation. The general manager of the M.E.D. in Christchurch, Mr Chris Laurie, could not say what effect the new price would have on retail electricity prices in the city. However, with electrical supply authorities facing new taxation provisions from April 1, and a building boom in central Christchurch, city consumers may face a difficult year. The M.E.D. 1987-88 budget is still being prepared, in time for official approval in February. "We are not in a position to make any meaningful comments about what the effect will be until w? have completed

our budget,” said Mr Laurie.

The bulk tariff — the wholesale rate for buying power from the Government — was only part of the cost of supply, he said. The Electrical Supply Authorities’ Association was still trying to clarify the taxation provisions, and was waiting for answers from the Inland Revenue Department. Replies were expected within the next few weeks.

The supply authorities face being taxed at 48c in the dollar on their operating profits, as thopgh they were private companies.

The M.E.D. has used much of the operating profits in the past to finance capital works. The new tax may force a review of those arrangements. The other factor in next year’s retail increase may be the central city buildings now under construction.

“It is going to require us to spend a reasonable amount of capital to be in

a position to supply them,” Mr Laurie said.

The construction boom might affect M.E.D. budget calculations for the next two or three years, he said. Mr Tizard said the tariff increase maintained the price for bulk supply at a constant level in real terms. The move would maintain the price until the new Electricity Corporation determined a pricing strategy after the handover from the Ministry of Energy next year.

The Establishment Board recommended the increase before finishing negotiations on the price the corporation would be required to pay for the assets of the Electricity Division. “With this in mind, the board has consulted the Electrical Supply Authorities Association on the need to provide an opportunity to review the tariff level on or before September 30, 1987, if this proves to be necessary,” Mr Tizard said.