Commercial users to feel benefits first

Press, 1 June 1989, Page 3

Commercial users to feel benefits first

Commercial electricity consumers in Christchurch, rather than householders, will feel the first benefits of Electricorp’s commitment to keep price rises below the inflation rate.

The chairman of Southpower, Mr Len Seear, said Southpower welcomed the promise and would take every opportunity to pass on the benefits to customers. A lot would depend on the deal it was able to strike with Electricorp on bulk power prices to apply after October 1, when the present contract expires. Southpower had a policy, shared with most of New Zealand’s supply authorities, of reducing non-domestic tariffs relative to domestic, to reduce what is regarded as undue cross-subsidisation.

A modest increase in wholesale rates in October may allow non-domestic rates to be held to present levels, while domestic consumers would face a small increase.

If Southpower can negotiate a small decrease in wholesale prices, there would then be “every chance” of holding domestic tariffs, while reducing nondomestic tariffs in dollar terms, said Mr

Seear. Mr Seear would not commit Southpower to any course of action. Southpower, the country’s second biggest supply authority, has only been operating since the merger of the Christchurch M.E.D. and the Central Canterbury Electric Power Board in February. Mr Seear said there were a considerable number of unknowns in the merged authority’s financial position. The budget for the year beginning April 1 had been prepared with the understanding it would have to be reviewed in six months, he said. Tariffs in the C.C.E.P.B. area were generally higher than in the M.E.D. area, and the Board could choose to reduce, if not eliminate, the differences. That would be to the benefit of the C.C.E.P.B. area but to the detriment of consumers in the city. Another factor was that Electricorp had dropped the coincident demand tariff which operated last winter, under which supply authorities were given price concessions if they were able to reduce demand on peak load days.