Warn­ing over fixed-price power con­tracts

Central Leader - - SCHOOL’S OUT - SU­SAN ED­MUNDS

House­holds are be­ing warned that tak­ing a fixed-price deal from their power com­pa­nies could be a one-way bet.

Many power com­pa­nies are of­fer­ing their cus­tomers the chance to fix their prices.

Con­sumer NZ chief ex­ec­u­tive Sue Chetwin said it was likely that some power re­tail­ers would have seen pub­lic­ity about spot prices mov­ing up be­cause of a dry win­ter, and de­cided it was a good time to tempt peo­ple into fixedterm con­tract.

But she said it was not worth pay­ing more for pro­tec­tion against pos­si­ble fu­ture rises.

Strong com­pe­ti­tion in the elec­tric­ity mar­ket was likely to limit price in­creases, she said.

‘‘The chances of a rad­i­cal in­crease in prices are prob­a­bly quite small.’’

And most power com­pa­nies’ con­tracts al­low them to pass on any in­crease in trans­mis­sion costs, which is about 10 per cent of a typ­i­cal bill, and other as­so­ci­ated net­work charges.

Chetwin said in many cases the re­tailer was only promis­ing to fix the price of about a third of the bill.

The rest could rise re­gard­less. She would not rec­om­mend a fixed-term deal.

‘‘You’re stuck and you have to pay a break fee if you want to get up. The fact is the mar­ket is pretty com­pet­i­tive, why would you bother?

‘‘You can drive a de­cent bar­gain by speak­ing to your elec­tric­ity re­tailer.’’

Con­tact is rolling out an of­fer to some cus­tomers, telling them their prices are ris­ing but they can fix the new rate un­til 2019 to avoid fur­ther price hikes.

But a spokesman says prices will change if the net­work in­creases its prices, or there are changes to levies, taxes or reg­u­la­tions.

‘‘Fixed plans are prov­ing pop­u­lar with our cus­tomers as they pro­vide more cer­tainty around cus­tomers’ en­ergy costs, which helps with bud­get­ing.

‘‘We have around 30 per cent of our cus­tomers on fixed plans,’’ a spokesman said.

There are a num­ber of pro­cesses un­der way that could lead to sig­nif­i­cant in­creases in net­work charges for some cus­tomers.

The Com­merce Com­mis­sion is as­sess­ing lines com­pany Pow­erco’s ap­pli­ca­tion to hike prices to meet the cost of its planned $1.32 bil­lion in­vest­ment in its North Is­land net­work.

‘‘The chances of a rad­i­cal in­crease in prices are prob­a­bly quite small’’

MAARTEN HOLL/FAIR­FAX NZ

Con­sumer NZ chief ex­ec­u­tive Sue Chetwin says fixed-price power is not worth pay­ing more for.

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