Decision on power prices stalled

Press, 17 November 1987, Page 5

Decision on power prices stalled

PA Wellington Electricity supply authorities say they will be hard pressed to set power prices for consumers in time for the new financial year unless some decision on bulk electricity prices is made by Christmas. Mr Eric Johnstone, the president of the Electricity Supply Association, said three months was the minimum time for supply authorities to be able to act on setting new power prices. Supply authorities have traditionally been advised of the future Bulk Supply Tariff by the Minister of Energy at their conferences in September or October. However, bulk electricity charges are now the responsibility of Electricorp, and a decision on future electricity prices has been stalled by the failure to decide the value of the corporation’s assets. Officials from Electricorp and the Treasury are meeting to try to resolve the issue after eight months of negotiation. The Government has given them until Friday to reach an agreement. After that, the Minister of Finance, Mr Douglas, and

the Minister of StateOwned Enterprises, Mr Prebble, will receive submissions from the parties and decide on a value themselves. Electricorp’s chairman, Mr John Fernyhough, said future electricity prices could not be determined until the value of the corporation’s assets was known. The corporation was making the pricing of wholesale bulk electricity more flexible than the previous single Bulk Supply Tariff, but he did not expect this process to be finalised until the New Year. That timing would make it “close” for the supply authorities to be able to implement their new charges on April 1, h§ said. Mr Johnson said supply authorities needed a month to notify the public of future electricity prices. Power boards and municipal electricity departments also needed a month to arrange meetings on the matter, and their staff needed another month to do all the calculations involved in setting new charges. “In this case it is probably going to be more difficult because there is

not likely to be a percentage increase on the existing tariff,” he said. “There are going to be some changes in the form of the tariff. In some cases tariffs might not increase at all, in others there could be changes.” One way around the problem of setting future electricity prices could be for Electricorp to decide on a “temporary” price. Supply authorities would prefer to know the new prices so they could start the new financial year on a firm basis, said Mr Johnson. However, his main concern was the way the asset valuation process was being handled. The supply authorities had taken legal advice which indicated Ministerial intervention to resolve the valuation would be “inappropriate.” The association hoped to meet Mr Prebble this week to make this point, and he did not rule out the possibility of the association taking some legal action. Mr Johnson would' not specify what action was possible, and said it depended on whether they were able to talk to Mr Prebble.